A company manufactures three products using the same production process. The costs incurred up to the split-off point are $200,000. These costs are allocated to the products on the basis of their sales value at the split-off point. The number of units produced, the selling prices per unit of the three products at the split-off point and after further processing, and the additional processing costs are as follow:
Instructions
(a) Which product(s) should be processed further and which should be sold at the split-off point?
(b) Would your decision be different if the company was using the quantity of output to allocate joint costs? Explain.

Question

A company manufactures three products using the same production process. The costs incurred up to the split-off point are $200,000. These costs are allocated to the products on the basis of their sales value at the split-off point. The number of units produced, the selling prices per unit of the three products at the split-off point and after further processing, and the additional processing costs are as follow:  
Instructions
(a) Which product(s) should be processed further and which should be sold at the split-off point?
(b) Would your decision be different if the company was using the quantity of output to allocate joint costs? Explain.

Quizplus · Accepted Answer

The Answer of A company manufactures three products using the same production process. The costs incurred up to the split-off point are $200,000. These costs are allocated to the products on the basis of their sales value at the split-off point. The number of units produced, the selling prices per unit of the three products at the split-off point and after further processing, and the additional processing costs are as follow:  
Instructions
(a) Which product(s) should be processed further and which should be sold at the split-off point?
(b) Would your decision be different if the company was using the quantity of output to allocate joint costs? Explain.

A Company Manufactures Three Products Using the Same Production Process