Colorado Company uses a joint process to manufacture products R, S, and T. Each product can be sold at the point of separation, or it can be processed further. All additional processing costs are directly traceable to each product that is processed further. Joint production costs for the year are $\$ 140,000$ and are allocated to products $\mathrm{R}, \mathrm{S}$, and $\mathrm{T}$ on the basis of their sales values at the point of separation. The pertinent data accumulated by the accounting department for these products are:

1. Which products should Colorado Company process further (after separation) in order to maximize its profits? Show computations 2. Explain why you did or did not use the allocated joint costs in deciding which of the products to process further.

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Sales Value Product Units at Separation Allocation of Joint Costs Sales Value and Additional Costs of Processing Further Sales Value Additional Costs RST 18,000 $150,000 $70,000 20,000 120,000 56,000 $190,000 150,000 $24,000 40,000 10,000 30,000 14,000 60,000 25,000