Question

Exercise 7-11 Kirk Minerals processes materials extracted from mines. The most common raw material that it processes results in three joint products: Spock, Uhura, and Sulu. Each of these products can be sold as is, or each can be processed further and sold for a higher price. The company incurs joint costs of $179,700 to process one batch of the raw material that produces the three joint products. The following cost and sales information is available for one batch of each product. Spock Uhura Sulu Sales Value at Split-Off Point $210,300 300,900 454,100 Allocated Joint Costs $39,100 60,100 80,500 Cost to Process Further $110,200 85,900 250,900 Sales Value of Processed Product $300,700 399,100 799,200 Determine the incremental profit or loss that each of the three joint products. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Spock Uhura Sulu Incremental profit (loss) Indicate whether each of the three joint products should be sold as is, or processed further. Spock Uhura Sulu

Answer 1

a
	Spock	Uhura	Sulu
Sales value after further processing	300700	399100	799200
Less: Sales value at the split-off point	210300	300900	454100
Incremental revenue	90400	98200	345100
Less: Total incremental processing costs	110200	85900	250900
Incremental profit (loss)	-19800	12300	94200
b
Spock	Sold as is
Uhura	Processed Further
Sulu	Processed Further