Dundee Company currently produces three products from a joint process. The joint

Question

Dundee Company currently produces three products from a joint process. The joint process has total costs of $250,000 per month All three products, A. B & C. are immediately saleable as they come out of the joint process Alternatively, any of the products could continue on with additional processing and be sold as a more complete product The following information s available A 50000 75000$10 C 100.000 $ 10 $ 15 s 20 s 6 $ 4 s 3 $ 15 Which of the products should be sold after further pr O Products A and C O Product B only O Products B and C O Product A only

Explanation / Answer

Product

Later sales price

Immediate sales price

Incremental sales price

Unit cost of further processing

Incremental profit per unit

(Later sales price - Immediate sales price)

A

$ 10

$ 5

$ 5

$ 6

$ 1

B

$ 15

$ 10

$ 5

$ 4

$ -1

C

$ 20

$ 15

$ 5

$ 3

$ -2

Correct answer is Product A only because it will lead to incremental profit

Product

Later sales price

Immediate sales price

Incremental sales price

Unit cost of further processing

Incremental profit per unit

(Later sales price - Immediate sales price)

A

$ 10

$ 5

$ 5

$ 6

$ 1

B

$ 15

$ 10

$ 5

$ 4

$ -1

C

$ 20

$ 15

$ 5

$ 3

$ -2

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