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SELL AT SPLIT OFF POINT OR PROCESS FURTHER & JOINT COST ALLOCATION Lauricella Inc. produces three products from a common set of inputs for $95,000.
SELL AT SPLIT OFF POINT OR PROCESS FURTHER & JOINT COST ALLOCATION
Lauricella Inc. produces three products from a common set of inputs for $95,000. Other sales and cost data follow:
Unit Sales Price ____ Costs After
At After further Split-off
Product Quantity Split-off Processing Point__
Regular 8,000 $ 8 $ 10 $ 10,000
Special 5,000 5 8 15,000
Premium 4,000 6 10 20,000
REQUIRED:
- Which products should be sold at the split-off point?
- Which products should be processed further?
- What are Joint Costs?
- For the purposes of making this decision, should joint costs be allocated? Why or why not?
- Are there any OTHER reasons why we might want to allocate these costs?
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