Sales Value at Split-Off | Further Processing Costs | Sales Value After Further Processing | Incremental Sales Revenue | Incremental Profit / Loss | |
Felcore | 185,000 | 85,000 | 275,000 | 275,000-185,000 = 90,000 | 90,000-85,000= 5,000 |
Greathnest | 195,000 | 110,000 | 290,000 | 290,000-195,000 = 95,000 | 95,000-110,000= -15,000 |
Highlander | 325,000 | 45,000 | 380,000 | 380,000-325,000 = 55,000 | 55,000-45,000 = 10,000 |
Iopia | 275,000 | 55,000 | 325,000 | 325,000-275,000 = 50,000 | 50,000-55,000 = -5,000 |
Justrite | 155,000 | 70,000 | 235,000 | 235,000-155,000 = 80,000 | 80,000-70,000 = 10,000 |
From the above analysis it can be seen that products Greathest and Iopia should be sold at the split off since if these are processed further, they will provide losses and products Feclore , Highlander and Justrite should be processed further.
Kindly comment if you need further assistance. Thanks‼!
1 Mitchener Corp. manufactures three products from a common input in a joint processing operation. 2...
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