Question

or finished bookcases. BE7.6 (L04), AP Each day. Adama Corporation processes 1 ton of a secret raw material into two result ing products, ABI and XYI. When it processes 1 ton of the raw material, the company incurs joint Determine whether to sell or process further joint products

Answer 1

Answet - Giao da , BE36 Page No ① Given that , The oresulting products AB; & xy Adoma Corporation processes rave materials = 1 ton Company incurs joint processing costs = $60,000 AB, allocated cost - $ 25000 XY allocated cost $ 35000 The resulting AB, can be sold for $ 100,000 AB2 at an additional processing corof gf $45000 & sold for $150,000 . XY, can be sold for $95000 XYZ at an additional processing cost of $50,000 sold for $ 130,000 AR2 Incremental income (loos) of processing AB, bo produce a B2 = ( 150,000 --- $100,000) – 45000 3 50,000 – 45000

Page No ③ $5000 Incremental income (less) of processing Xy, to produce XY2 * ( 130,000 – 95000) - $50,000 = 35000 – 50000 = - $15000 By comparing the both incremental income (loss) of processings, it is recommended that the process products AB, to produce AB2 . a self products o'. Adama. Corporation should make ABQ & Product XY,