16. Walman Corp. manufactures products X. Y, and Z from a joint production proce
ID: 2431448 • Letter: 1
Question
16. Walman Corp. manufactures products X. Y, and Z from a joint production process. Joint costs are allocated to products on the basis of relative sales value at the split-off point. Additional as follows: information is Total 30,000 66.000 $360.000 50,000 110,000 600,000 30,000 22000 90,000 produced 4,000 10,0006 Units Joint costs Sales value at split-off Additional costs for further processing Sales value if processed further $204,000 $90 38 348,000185,000147,000 680,000 Based solely on a relevant cost analysis, which of the three products should be manufactured by Walman beyond the spit-off point? A. Only X B. Only Y C. Only Z D. Only Y and Z E. All three products: X, Y and ZExplanation / Answer
A split-off point is a location in a production process where jointly manufactured products are henceforth manufactured separately. Thus their costs can be identified separately after split off point. Prior to the split off point, production costs are allocated.
X
Y
Z
Sales value at split off point
US$? 340000.00
US$? 150000.00
US$? 110000.00
Additional cost for further processing
US$? 38000.00
US$? 30000.00
US$? 22000.00
Sales value if further processed
US$? 348000.00
US$? 185000.00
US$? 147000.00
By seeing the above table by selling product X we suffer loss because even after further processing we can sell that only for $348000, but the additional cost spent is $38000. The sales value has been increased by only $8000.
so, the answer is option D.
X
Y
Z
Sales value at split off point
US$? 340000.00
US$? 150000.00
US$? 110000.00
Additional cost for further processing
US$? 38000.00
US$? 30000.00
US$? 22000.00
Sales value if further processed
US$? 348000.00
US$? 185000.00
US$? 147000.00
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