A joint input costing $500 results in four distinct products at the point of split-off. Relevant data follows: $\begin{array}{cccc}
&\text { Sales Value } &\text {Separable} &\text {Sales Value After }\
\text { Product } &\text { at Split-Off } &\text { Cost } & \text { Further Processing }\
\text {J }& \$ 200 & \$ 100 & \$ 400 \
\text {K }& 300 & 200 & 600 \
\text {L }& 100 & 50 & 140 \
\text {M} & 20 & 10 & 40
\end{array}$
Which of the four products should not be further processed?
A) J
B) K
C) L
D) M

Question

A joint input costing $500 results in four distinct products at the point of split-off. Relevant data follows: $\begin{array}{cccc}
&\text { Sales Value } &\text {Separable} &\text {Sales Value After }\
\text { Product } &\text { at Split-Off } &\text { Cost } & \text { Further Processing }\
\text {J }& \$ 200 & \$ 100 & \$ 400 \
\text {K }& 300 & 200 & 600 \
\text {L }& 100 & 50 & 140 \
\text {M} & 20 & 10 & 40
\end{array}$
 Which of the four products should not be further processed?
A) J
B) K
C) L
D) M

Quizplus · Accepted Answer

The decision to process further should be based on whether the incremental revenue from further processing exceeds the incremental cost. For product L, the sales value after further processing ($140) minus the separable cost ($50) results in a net value of $90, which is less than its split-off value of $100. Therefore, it should not be processed further.

A Joint Input Costing $500 Results in Four Distinct Products