A manufacturing company uses a joint production process that produces three products at the split-off point. Joint
Question:
A manufacturing company uses a joint production process that produces three products at the split-off point. Joint production costs during April were P720,000. The company uses the net realizable value method for allocating joint costs. Product information for April was as follows:
Product
R S T
Gallons produced 2,500 5,000 7,500
Sales prices per gallon:
At the split-off 100 80 20
After further processing 150 115 30
Costs to process after split-off 150,000 150,000 100,000
Required:
a. Assume that all three products are main products and that they can be sold at the split-off point or processed further, whichever is economically beneficial to the company. Which of the three products should be processed further and which should be sold at split-off?
b. How much is the total income to be earned from the decision in letter (a) above.
Cost Accounting Foundations and Evolutions
ISBN: 978-1111626822
8th Edition
Authors: Michael R. Kinney, Cecily A. Raiborn