Refer to the data in Exercise 11-39. Suppose that Sanford Agricultural Chemicals uses the physical quantities method to allocate joint costs and the revenues from by-products are credited to joint costs. 

Data in Exercise 11-39

Sanford Agricultural Chemicals (SAC) produces two main products, M-4 and M-5, and one byproduct, BYP, from a single input, Gen-10. Products M-4 and M-5 can either be sold at split-off  or processed further and sold. A given batch begins with 2,500 pounds of Gen-10 with a cost of $160,000. Additional information regarding a batch follows: 

SAC uses the net realizable at split-off approach to allocate joint costs and treats the sales value of the by-product BYP as other income. 

Required

Under these assumptions, the following product(s) should be processed further and then sold:

a. M-4

b. M-5

c. Both M-4 and M-5

d. Neither M-4 nor M-5

e. Cannot tell from the information given.

Transcribed Image Text:

Product M-4.. M-5. BYP Units Produced 20,000 12,000 4,000 Unit Sales Value at Split-off $ 8.25 17.50 0.90 If Processed Further Additional Costs (Per Unit) $1.80 7.00 ΝΑ Sales Value (Per Unit) $15.00 25.00 ΝΑ