Question
Yu Corporation produces product A, B and C from a joint production process. Each product may be sold at the split-off point or processed further.
Yu Corporation produces product A, B and C from a joint production process. Each product may be sold at the split-off point or processed further. Joint production costs of $100,000 per year are allocated to the products based on the relative number of units produced. Data for Yu's operations for 2020 are as follows:
Additional costs
and sales values
if processed further
Product | Units Produced | Joint Production Costs | Sales values at split-off | Profit/Loss at split off |
Added Costs* | Sales Values |
A
| 8,000 | $34,000 | $29,000 | ($5,000) | $ 2,300 | $32,000 |
B
| 9,000 | $28,000 | $34,500 | $6,500 | 14,500 | $48,000 |
C
| 4,000 | $38,000 | $51,800 | $13,800 | 9,200 | 63,500 |
*All variable and traceable to the products involved.
Required:
Which products should be processed beyond the split-off?
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