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Cornerstones of Managerial Accounting 6th Edition by Maryanne Mowen,Don Hansen ,Dan Heitger
Edition 6ISBN: 978-1305103962Cornerstones of Managerial Accounting 6th Edition by Maryanne Mowen,Don Hansen ,Dan Heitger
Edition 6ISBN: 978-1305103962 Exercise 39
Sell at Split-Off or Process Further
Bozo Inc. manufactures two products from a joint production process. The joint process costs $110,000 and yields 6,000 pounds of LTE compound and 14,000 pounds of HS compound. LTE can be sold at split-off for $55 per pound. HS can be sold at split-off for $9 per pound. A buyer of HS asked Bozo to process HS further into CS compound. If HS were processed further, it would cost $34,000 to turn 14,000 pounds of HS into 4,000 pounds of CS. The CS would sell for $45 per pound.
Required:
1. What is the contribution to income from selling the 14,000 pounds of HS at split-off?
2. CONCEPTUAL CONNECTION What is the contribution to income from processing the 14,000 pounds of HS into 4,000 pounds of CS? Should Bozo continue to sell the HS at splitoff or process it further into CS?
Bozo Inc. manufactures two products from a joint production process. The joint process costs $110,000 and yields 6,000 pounds of LTE compound and 14,000 pounds of HS compound. LTE can be sold at split-off for $55 per pound. HS can be sold at split-off for $9 per pound. A buyer of HS asked Bozo to process HS further into CS compound. If HS were processed further, it would cost $34,000 to turn 14,000 pounds of HS into 4,000 pounds of CS. The CS would sell for $45 per pound.
Required:
1. What is the contribution to income from selling the 14,000 pounds of HS at split-off?
2. CONCEPTUAL CONNECTION What is the contribution to income from processing the 14,000 pounds of HS into 4,000 pounds of CS? Should Bozo continue to sell the HS at splitoff or process it further into CS?
Explanation
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1.
Calculate the contribution to income ...
Cornerstones of Managerial Accounting 6th Edition by Maryanne Mowen,Don Hansen ,Dan Heitger
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