Performance management Topic 2.1: Short term decision making technique

Question 5 SJ Chemicals produces three joint products in one common process but each product is capable of being further processed separately aer the split-off point. The estimated data given below relate to the month of June 20XX. Product P Product Q Product R Selling Price at split-off point (per-liter) $6 $8 $9 Selling Price after further processing (per- liter) $10 $20 $30 Post-separation point costs $20,000 $10,000 $22,500 Output in liters 3,500 2,500 2,000 Pre-separation point joint costs are estimated to be $40,000 and it is current practice to apportion these costs to the three products according to liters produced. Required: a) Prepare a statement of estimated prot or loss for each product and in total for June, if all three products are processed further. b) Advise how prots could be maximized if one or more products are sold at the split-off point. Your advice should be supported by a prot statement. c) Consider whether apportioning joint process costs to joint products is useful in the decision-making process