Information about three joint products follows: The cost of the joint process is $140,000. Which of the joint products should be processed further?
A) X
B) Y
C) Z
D) both X and Y

Question

Information about three joint products follows:  The cost of the joint process is $140,000. Which of the joint products should be processed further?
A) X 
B) Y 
C) Z 
D) both X and Y

Quizplus · Accepted Answer

To determine which joint product should be processed further, we need to use the net realizable value (NRV) method.

NRV = Selling price - Processing costs

Product X: 
NRV = $40,000 - $20,000 = $20,000

Product Y: 
NRV = $60,000 - $30,000 = $30,000

Product Z: 
NRV = $25,000 - $10,000 = $15,000

From the NRV calculations, we can see that Product Y has the highest NRV and should therefore be processed further. Product X has a lower NRV than Y and should not be processed further. Product Z has the lowest NRV and should not be processed further either. Therefore, the best choice is option C: Z.

Information About Three Joint Products Follows: the Cost of the Joint