Variable Products Co. produces 3 products from a joint process costing $2,000. These products can be processed further to form another set of 3 products. Markets exist for all of the products. Data for the current period are:

a)What is the gross margin if all products are sold after further processing?
b)What is the gross margin if the best product mix is chosen?
c)Assume that E-1 cannot be sold at the split-off point. Should this product be processed further? Explain, and provide computations to support your answer.

Question

Variable Products Co. produces 3 products from a joint process costing $2,000. These products can be processed further to form another set of 3 products. Markets exist for all of the products. Data for the current period are:
  
a)What is the gross margin if all products are sold after further processing?
b)What is the gross margin if the best product mix is chosen?
c)Assume that E-1 cannot be sold at the split-off point. Should this product be processed further? Explain, and provide computations to support your answer.

Quizplus · Accepted Answer

The Answer of Variable Products Co. produces 3 products from a joint process costing $2,000. These products can be processed further to form another set of 3 products. Markets exist for all of the products. Data for the current period are:
  
a)What is the gross margin if all products are sold after further processing?
b)What is the gross margin if the best product mix is chosen?
c)Assume that E-1 cannot be sold at the split-off point. Should this product be processed further? Explain, and provide computations to support your answer.