Solex Company manufactures three products from a common input ina joint processing operation. Joint processing costs up to thesplit-off point total $94,000 per year. The company allocates thesecosts to the joint products on the basis of their total sales valueat the split-off point. These sales values are as follows: productX, $52,000; product Y, $91,000; and product Z, $62,000.
Each product may be sold at thesplit-off point or processed further. Additional processingrequires no special facilities. The additional processing costs andthe sales value after further processing for each product (on anannual basis) are shown below:
Product Additional
Processing Costs Sales Value after
Further Processing X $ 39,000 $ 81,000 Y $ 39,000 $ 160,000 Z $ 11,000 $ 81,000
Required: a. Compute the incremental profit (loss) for each product.(Loss amounts should be indicated with a minussign.)
Product X Product Y Product Z Incremental profit(loss) $ $ $
b. Which product or products should be sold at the split-off point?(You may select more than one answer.Single click the box with the question mark to produce a check markfor a correct answer and double click the box with the questionmark to empty the box for a wronganswer.)
Product X Product Y Product Z
c. Which product or products should be processed further?(You may select more than one answer.Single click the box with the question mark to produce a check markfor a correct answer and double click the box with the questionmark to empty the box for a wronganswer.)
Product X Product Y Product Z
Solex Company manufactures three products from a common input ina joint processing operation. Joint processing costs up to thesplit-off point total $94,000 per year. The company allocates thesecosts to the joint products on the basis of their total sales valueat the split-off point. These sales values are as follows: productX, $52,000; product Y, $91,000; and product Z, $62,000. |
Each product may be sold at thesplit-off point or processed further. Additional processingrequires no special facilities. The additional processing costs andthe sales value after further processing for each product (on anannual basis) are shown below: |
Product | Additional Processing Costs | Sales Value after Further Processing | ||
X | $ | 39,000 | $ | 81,000 |
Y | $ | 39,000 | $ | 160,000 |
Z | $ | 11,000 | $ | 81,000 |
Required: | |
a. | Compute the incremental profit (loss) for each product.(Loss amounts should be indicated with a minussign.) |
Product X | Product Y | Product Z | |
Incremental profit(loss) | $ | $ | $ |
b. | Which product or products should be sold at the split-off point?(You may select more than one answer.Single click the box with the question mark to produce a check markfor a correct answer and double click the box with the questionmark to empty the box for a wronganswer.) | ||||||
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c. | Which product or products should be processed further?(You may select more than one answer.Single click the box with the question mark to produce a check markfor a correct answer and double click the box with the questionmark to empty the box for a wronganswer.) | ||||||
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