Benjamin Signal Company produces products R, J, C from a joint process. Each pro
ID: 2398323 • Letter: B
Question
Benjamin Signal Company produces products R, J, C from a joint process. Each product may be sold at the split off point or be processed further. Joint production costs of $92,000 are allocated to the products based on the relative number of units produced. Data for the current year operations follow: Product Allocated Joint Sales Value at Units Produced Production Cost 32,000 40,000 20,000 Spit off 8,000 10,000 5,000 $ 76,000 $ 71,000 48,000 Product R can be processed beyond the split off point for an additional cost of $26,000 and can then be sold for $105,000. Product J can be processed beyond the split off point for an additional $38,000 and then sold for $117,000. Product C can be processed beyond the split oft point for an additional $12,000 and then sold for $57,000. Required: Which products should be processed beyond the split off point? Show your calculations.Explanation / Answer
Product
R
J
C
Total
Units Produced
8,000
10,000
5,000
Sales value at split off point
76,000
71,000
48,000
1,95,000
Less-Allocated Joint cost
32,000
40,000
20,000
92,000
Profit at split off point [A]
44,000
31,000
28,000
1,03,000
Sales if processed further
1,05,000
1,17,000
57,000
2,79,000
Less- Joint cost
32,000
40,000
20,000
92,000
Less- Additional cost of processing further
26,000
38,000
12,000
76,000
Profit/(Loss) if processed further [B]
47,000
39,000
25,000
1,11,000
Increase/(Decrease) in profit if processed further (B-A)
3,000
8,000
(3,000)
8,000
Since the Profit of Product C is decreasing after processing further, it should be sold at split off point, other products can be processed further
Product
R
J
C
Total
Units Produced
8,000
10,000
5,000
Sales value at split off point
76,000
71,000
48,000
1,95,000
Less-Allocated Joint cost
32,000
40,000
20,000
92,000
Profit at split off point [A]
44,000
31,000
28,000
1,03,000
Sales if processed further
1,05,000
1,17,000
57,000
2,79,000
Less- Joint cost
32,000
40,000
20,000
92,000
Less- Additional cost of processing further
26,000
38,000
12,000
76,000
Profit/(Loss) if processed further [B]
47,000
39,000
25,000
1,11,000
Increase/(Decrease) in profit if processed further (B-A)
3,000
8,000
(3,000)
8,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.