Question

Raleigh Company manufactures two joint products. At the split-off point, they have sales values of:

• Product 1 $25 per unit
• Product 2 $15 per unit

After further processing, the company can sell them for $35 and $22, respectively. Product 1 costs $12 per unit to process further and Product 2 costs $5 to process further. Should further processing be done on either or both of these products? (show and label calculations)

Answer 1

Answer- Product 2 should be further processed and Product 1 should be sell at split-off-point.

Explanation-

Raleigh Company
Statement Of Incremental Profit/(loss)
Product	Sale Price at Split-Off-Point	Sale Price of processed product	Incremental sale per unit	Cost per unit to further process	Incremental profit/(loss) per unit
	$	$	$	$	$
	(a)	(b)	(c=b-a)	(d)	(e=c-d)
1	$25 per unit	$35 per unit	$10 per unit	$12 per unit	-2
2	$15 pe unit	$22 per unit	$7 per unit	$5 per unit	2