Question

enner Company produces products X, Y, and Z from a joint production process. ay be sold at the split-off point or processed further. Joint production costs of $132,372 per Each product year are allocated to the products based on the relative number of units produced. Data for Benner Company's operations for last year follow: Additional sales values and costs if processed further Sales values Added costs 50,922 $19,875 Units Sales values at split-off $82,625 $60,250 $31,502 Product Produced 3,000 6,000 2,000 $31,812 $49,372 $110,401 $112,517 All variable and traceable to the products involved. Indicate which products should be sold as is, and which should be processed further (beyond the split-off point)? Support your answer with appropriate computations. (2 points) 1347,815,000. 331,au3, oo งง 83,328 Co

Answer 1

Product X Product Y Product Z Total 11,000 82,625$ 60,250 $31,502 174,377 36,101 $ 72,203$ 24,068 $ 132,372 Quarterly output Sales value at split-off point Allocated joint costs ($ 132,372/Total units produced 11,000 * Units produced of the respective product) Profit (Loss) at split off point 3,000 6,000 2,000 46,524$ (11,953) $7,434 42,005 Profit of Loss if sold after futher processing Product X Product Z Total Product Y 3,000 6,000$2,000 Quarterly output Sales Value of Processed Product Less: Allocated joint costs Less: Cost to Process Further Profit (Loss) after further processing 110,401 $ 112,517$ 50,992 $ 273,910 36,101 $ 72,203$ 24,068$ 132,372 31,812 $ 49,372 19,875 $ 101,059 42,488$(9,058) $7,049 40,479 Incremental profit (loss Financial advantage (disadvantage) of processing further (Profit (Loss) after further processing Profit (Loss) at Split off point Product X Product Y Product Z Total (4,036) 2,895 (385)(1,526) ($-9,058- ($7,049-$ $-11,953)7,4334) ($42,488 -$ 46,524 Product X Yes No Product Y No Yes Product Z Yes No Sell at split off point? Process further? Product Y has a loss at split off point itself, if it is further process the loss would be reduced by $ 2,895