Required information

Skip to question

[The following information applies to the questions displayed below.]

Each of the following situations is independent:

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		13,300			9,300			5,300			27,900
Joint costs	$	157,000		$	73,000		$	83,300		$	313,300
Sales value before additional processing		253,000			113,000			73,000			439,000
Additional costs for further processing		34,500			33,000			25,000			92,500
Sales value if processed further		306,000			146,000			94,700			546,700

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?