Bowen Company makes two products from a joint production process. Each product m

Question

 Bowen Company makes two products from a joint production process. Each product may be sold at the split-off point or processed further. Information concerning these products for last year appears below:                                                Product X      Product Y Allocated joint costs ....................     $25,000        $17,000 Sales value after further processing .....     $47,000        $41,000 Sales value at the split-off point .......     $29,000        $23,000 Additional processing costs ..............     $19,000        $15,000  Assume Bowen Company makes all the correct sell or process further decisions.  Calculate the net income reported by Bowen Company last year.

Explanation / Answer

Decision analysis :

Calculate net income :

Total net income reported by bowen company is $13000

Product X Product Y Sale after further processingg 47000 41000 Sale at split off point 29000 23000 Incremental revenue 18000 18000 Additional processing cost 19000 15000 Incremental profit (loss) -1000 3000 Decision not process further Process further

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