Question
Russell Company produces three products: U, V and W from a joint manufacturing process. Each product may be sold at the split-off point or processed
Russell Company produces three products: U, V and W from a joint manufacturing process. Each product may be sold at the split-off point or processed further. Total joint manufacturing costs equal $300,000. Additional information is as follows.
a. Determine the amount of joint costs allocated to each product using the Sales Values at Split-Off method.
b. Determine the amount of joint costs allocated to each product using the Net Realizable Value method.
c. What product mix combination of the production and sale of each product maximizes operating income for Russell, selling at Split-Off or Processing Further? Show calculations to support your answer.
Sales Value at Split Off # Units Separable Processing Costs Product U v 12,400 21,700 31,000 $7.50/ unit $15.00 / unit $16.50 / unit Final Sales Value $8.00/ unit $16.00 / unit $20.00 / unit $30,852 $24,988 $34,160 wStep by Step Solution
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