Variable Products Co. produces 3 products from a $4,500 joint process. These products can be processed...

 

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Variable Products Co. produces 3 products from a $4,500 joint process. These products can be processed further to form another set of 3 products. There are markets for all of the products. Data for the current period are: Products A B с 1. 2. Instructions: 1.75 Marks Each 3. 4. 5. At Separation Sales Value $2,750 6. 650 3,600 Additional Costs $2,450 900 3,800 Products X Y Z After Processing Sales Value $5,450 1,350 7,600 What is the net income if the best product mix is chosen? If there was no market for B at the split-off point, should it be processed further? If an A could be processed directly, at no cost, into a C, at what opportunity cost should A be valued for purposes of making this decision? Referring to question 3 above, should A be processed into C? Why or why not? Assume that C can be processed directly into an X. If the firm is not to be any worse off as a result, the cost of processing should not exceed how much? Assume that A can be processed into Z at a cost of $5,250. If the sales value of Z is stable, to what level would the price of X have to fall before the firm is justified in taking this course of action? Variable Products Co. produces 3 products from a $4,500 joint process. These products can be processed further to form another set of 3 products. There are markets for all of the products. Data for the current period are: Products A B с 1. 2. Instructions: 1.75 Marks Each 3. 4. 5. At Separation Sales Value $2,750 6. 650 3,600 Additional Costs $2,450 900 3,800 Products X Y Z After Processing Sales Value $5,450 1,350 7,600 What is the net income if the best product mix is chosen? If there was no market for B at the split-off point, should it be processed further? If an A could be processed directly, at no cost, into a C, at what opportunity cost should A be valued for purposes of making this decision? Referring to question 3 above, should A be processed into C? Why or why not? Assume that C can be processed directly into an X. If the firm is not to be any worse off as a result, the cost of processing should not exceed how much? Assume that A can be processed into Z at a cost of $5,250. If the sales value of Z is stable, to what level would the price of X have to fall before the firm is justified in taking this course of action?

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1 The net income if the best product mix is chosen is 8950 calculated as follows Sales Value of A 27... View the full answer