Question

Exercise 20-11 Kirk Minerals processes materials extracted from mines. The most common raw material that it processer ts in three in 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 $180,100 to process one batch of the raw material that produces the three joint products. The folowing cost and was n ation a le for one batch of each product Spock Uhura Sales Value at Split-Off Point $209,700 299,700 455,000 Allocated Joint Costs $39,300 60,000 81.000 Cost to Process Further $109,000 $4,500 249,000 Sales Value of Processed Product $299,500 399 400 301,000 Determine the incremental profit or loss that each of the three joint products. (Enfer negative am Incremental profet loss) Indicate whether each of the three joint products should be sold as is, of processed further Spock Uhura Click if you would like to show Work for this question: Der Show Work

Answer 1

Incremental profit = Incremental sales value - Costs to process further

S.No.	Particulars	Spock	Uhura	Sulu
a.	Sales value at split off point	$209,700	$299,700	$455,000
b.	Sales value of processed product	$299,500	$399,400	$601,000
c.	Incremental sales value ( b - a )	$89,800	$99,700	$146,000
d.	Costs to process further	$109,600	$84,500	$249,000
e.	Incremental profit/loss ( c - d )	-$19,800	$15,200	-$103,000

Spock = Sold as it is. Because processing further will result into incremental loss of $19,800.

Uhura = Processed further. Because processing further will result into incremental profit of $15,200.

Sulu = Sold as it is. Because processing further will result into incremental loss of $103,000.