Question
The Arizona Company uses a joint process to produce products A, B, C, and D.Each product may be sold at its split-off point or processed
The Arizona Company uses a joint process to produce products A, B, C, and D.Each product may be sold at its split-off point or processed further.Joint processing costs for a single batch of joint products are $60,000.Other relevant data are as follows:
Product Gallons Sales Value Additional Sales
ProducedAt Split-Off Processing Costs Value
of
Final
Product
A 280 $30,000 $12,000 $48,000 B 250 20,000 9,000 36,000
C 450 45,000 28,000 70,000
D 220 20,000 13,000 32,000 Total 1,200 $115,000 $66,000 $186,000
1. Allocate the joint cost to the four primary products using the sales value at split off point method (round to whole dollars).
2. Determine which products should be processed further
3. Arizona Company only processes further the products you have determined in part 2. If all gallons of each product are sold what is the gross profit of each product.
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