Chemco produces a number of joint products.At the split-off point there are 100 units of A,400 units of B and 500 units of c.Total joint costs are $1000.Other information,per unit,is as follows:
$\begin{array}{lrrr}&A&B&C\
&\$&\$&\$\
\text { Selling price at split-off point } & 6 & 8 & 7 \
\text { Selling price if processed further } & 12 & 11 & 10 \
\text { Cost to process further } & 4 & 4 & 3
\end{array}$
Which products,if any,should be processed further?

Question

Quizplus · Accepted Answer

Product A should be processed further because the additional revenue from processing further ($12 - $6 = $6) is greater than the additional cost ($4). For products B and C, the additional revenue from processing further ($11 - $8 = $3 for B and $10 - $7 = $3 for C) is equal to the additional cost ($4 for B and $3 for C), so they should not be processed further.

Chemco Produces a Number of Joint Products Which Products,if Any,should Be Processed Further? A)B and C B)A

Chemco Produces a Number of Joint Products Which Products,if Any,should Be Processed Further?
A)B and C
B)A