PLEASE SHOW ALL WORKING.

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Question 2:

Part A

1. Briefly describe the treatment of Joint Costs when making a sell-or-process-further decision.
2. What is the decision rule in deciding whether to sell a product or process it further?

5 Marks

Part B

Collie Company has a joint process that produces three products: R, D, and A. Each product may be sold at split-off or processed further and then sold. Joint processing costs for a year amount to $300,000. Other relevant data are as follows:

Product	Sales Value		Costs after		Sales Value
	at Split-Off		Split-Off		at Completion
	$		$		$
R	120,000		260,000		420,000
D	80,000		140,000		190,000
A	150,000		190,000		350,000

Required:

1. Determine total net income if all products are sold at split-off point. 2 Marks
2. Determine total net income if all products are sold after processing. 2 Marks
3. Using incremental analysis determine which products should be sold at split-off point and which should be processed further. 6 Marks