Benjamin Company produces products C, J, and R from a joint production process. Each product may...
- Benjamin Company produces products C, J, and R from a joint production process. Each product may be sold at the split-off point or processed further. Joint production costs of $95,000 per year are allocated to the products based on the relative number of units produced. Data for Benjamin's operations for last year follow:
|
Units Produced |
Sales Values at Split-Off |
Sales Values If Processed Further |
Costs of Processing Further |
||
|
Product C |
6,000 |
$75,000 |
$100,000 |
$20,000 |
|
|
Product J |
9,000 |
$70,000 |
$115,000 |
$36,000 |
|
|
Product R |
4,000 |
$46,500 |
$55,000 |
$10,000 |
Required:
Which products should be processed beyond the split-off point?
Homework Answers
Answer:
| C | J | R | |
| Sales value after further processing | 100000 | 115000 | 55000 |
| Sales value after split off | 75000 | 70000 | 46500 |
| Added sales value after processing | 25000 | 45000 | 8500 |
| Added processing cost | 20000 | 36000 | 10000 |
| Net gain( loss) from further processing | 5000 | 9000 | (1500) |
Explanation
Product C and J should process beyond the split off point . Product R should sold at split - off . Joint production cost are not relevant to the decision to sell at split off or to process further
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