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The Kirsten Company uses a joint process to produce products A, B, C, and D. Each product may be sold at its split-off point or
The Kirsten 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 $65,000. Other relevant data are as follows:
Product | Sales Value At Split-Off | Additional Costs of Processing | Sales Value of Final Product | ||
A | $15,000 | $18,000 | $ 45,000 | ||
B | 27,000 | 15,000 | 40,000 | ||
C | 20,000 | 25,000 | 30,000 | ||
D | 13,000 | 11,000 | 25,000 | ||
$75,000 | $69,000 | $140,000 |
Calculate the effect on profits of processing Product A further beyond the split-off point.
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