Question
Profit from Processing Further Deaton Corporation manufactures products A, B, and C from a joint process. Joint costs are allocated on the basis of relative
Profit from Processing Further Deaton Corporation manufactures products A, B, and C from a joint process. Joint costs are allocated on the basis of relative sales value of the products at the split-off point. Additional information for Deaton Corporation follows:
A | B | C | Total | |||||||||
Units produced | 13,700 | 9,700 | 5,700 | 29,100 | ||||||||
Joint costs | $ | 161,000 | $ | 77,000 | $ | 90,900 | $ | 328,900 | ||||
Sales value before additional processing | 257,000 | 117,000 | 77,000 | 451,000 | ||||||||
Additional costs for further processing | 36,500 | 37,000 | 29,000 | 102,500 | ||||||||
Sales value if processed further | 314,000 | 154,000 | 102,300 | 570,300 | ||||||||
Required:
2a. For each of the three products (A, B, and C), calculate the differential benefit (loss) from processing the product after the split-off point rather than selling the product at the split-off point. (Loss amounts should be indicated with a minus sign.)
2b. Which, if any, of products A, B, and C should be processed further and then sold?
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Product A
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Product B
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Product C
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None of the above
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All of the above
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