SHE, Inc., produces three products (Alpha, Beta, and Gamma) from a common input. The joint costs...

 

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SHE, Inc., produces three products (Alpha, Beta, and Gamma) from a common input. The joint costs for a typical quarter follow: Direct materials Direct labor Overhead P500,000 36,000 72,000 The revenues from each product are as follows: Alpha, P100,000; Beta, P93,000; and Gamma, P30,000. Management is considering processing Alpha beyond the split-off point. which would increase the sales values of Alpha to P120,000. However, to process Alpha further means that the company must rent some special equipment costing P15,400 per quarter. Additional materials and labor also needed would cost P8,500 per quarter. Required: 1. What is the operating profit earned by the three products for one quarter? 2. Should the division process Product Alpha further or sell it at split-off? What is the effect of the decision on quarterly operating profit? SHE, Inc., produces three products (Alpha, Beta, and Gamma) from a common input. The joint costs for a typical quarter follow: Direct materials Direct labor Overhead P500,000 36,000 72,000 The revenues from each product are as follows: Alpha, P100,000; Beta, P93,000; and Gamma, P30,000. Management is considering processing Alpha beyond the split-off point. which would increase the sales values of Alpha to P120,000. However, to process Alpha further means that the company must rent some special equipment costing P15,400 per quarter. Additional materials and labor also needed would cost P8,500 per quarter. Required: 1. What is the operating profit earned by the three products for one quarter? 2. Should the division process Product Alpha further or sell it at split-off? What is the effect of the decision on quarterly operating profit?

Answer rating: 100% (QA)

Requirement A To compute the operating profit loss for the quarter Solution Account Amou... View the full answer