A company manufactures three products using the same production process. The costs incurred up to the split-off
Question:
A company manufactures three products using the same production process. The costs incurred up to the split-off point are $200,000. These costs are allocated to the products on the basis of their sales value at the split-off point. The number of units produced, the selling prices per unit of the three products at the split-off point and after further processing, and the additional processing costs are as follow:
Product | Number of units Produced | Selling price at split-off | Selling price after Processing | Additional Processing Costs |
X | 5,000 | $10.00 | $15.00 | $14,000 |
Y | 10,000 | 11.60 | 16.20 | 21,000 |
Z | 4,000 | 19.40 | 21.60 | 12,000 |
Requires:
Which product(s) should be processed further and which should be sold at the split-off point?
Managerial Accounting Tools for business decision making
ISBN: 978-1118096895
6th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso