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Winnovia Mills processes cotton in a joint process that yields two joint products: fabric and yarn. May's joint cost is $80,000, and the sales values
Winnovia Mills processes cotton in a joint process that yields two joint products: fabric and yarn. May's joint cost is $80,000, and the sales values at split-off are $240,000 for fabric and $200,000 for yarn. If the products are processed beyond split-off, the final sales value will be $360,000 for fabric and $280,000 for yarn. Additional costs of processing are expected to be $80,000 for fabric and $68,000 for yarn. a. Should the products be processed further? Show computations. b. Were any revenues and/or costs irrelevant to the decision? If so, what were they and why were they irrelevant?
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