Urteg Company produces three products, A, B, and C, from a single raw material.

Question

Urteg Company produces three products, A, B, and C, from a single raw material. Budgeted data for next month follows:

A

B

C

Units produced

3,000

4,500

6,000

Sales value at split-off (per unit)

$15

$18

$24

Additional processing costs (per unit)

$4

$6

$7

Joint production costs (per unit)

$2

$5

$5

Sales value if processed further (per unit)

$16

$30

$34

The joint cost of the raw material is $190,000. Which of the products should be produced beyond the split-off point?

A

B

C

Answer

A.

No

No

No

B.

No

Yes

Yes

C.

Yes

Yes

Yes

D.

No

Yes

No

A

B

C

Explanation / Answer

B   NO YES YES

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