s://newconnect.mheducation.com/flow/con thtml ork BioMorphs Corporation produces
ID: 2438369 • Letter: S
Question
s://newconnect.mheducation.com/flow/con thtml ork BioMorphs Corporation produces three products in a monthly joint production process. During the first stage of the process liquids and chemicals costing $41,000 are heated and three different compounds emerge: 3,000 galions of Molecue worth $22 per created from the steam, 10,000 gallons of Borphue worth $15 are as Polygard, are sold as fertilizer for $7.50 per and before the Polygard fertilizer is sold, it must be bottled at a price of $1.50 per gallon. drained from the tank; and 1,000 gallons of the tank residue, lebeled gallon. Before Molecue is sold, it must be purified in another process thet costs $10.400 a. What is the profitability of the joint process? b. Is it profitable to process Molecue further if it can be sold at split-off for $9 per gallon? c. BioMorphs has an offer to buy Polygard bulk at the split-off point without bottling for $3.200 per month. What is the profit (loss) to BioMorphs if it accepts the offer? Complete this question by entering your answers in the tabs below. Requirfd ARequired B Required C the joint process? What is the profitability of NextExplanation / Answer
Required - (a)
Profitability of Joint process
Note for Polygard, we take Net reliasable value of ( 7.50 - 1.50 bottle cost ) = 6
Required - b
Incremental Revenue = ( 22 - 9) * 3000 = 39000
Incremental Cost ......................... 10400
Incremental Profit = ( 39000 - 10400) = 28,600
Is it profitable to process further .......... Yes
Required - C
Incremental Profit / (Loss) = - 2800
Revenue ( Net of bottling cost ) = 6000
Revenue ( at split of point ) = 3200
Decrease in profit = 6000 - 3200 = 2800
Product Quantity Price Amount Molecue 3000 22 66000 Borphue 10000 15 150000 Polygard 1000 6 6000 Total Revenue 222000 (-) Joint cost 41000 (-) Further processing cost of Molecue 10400 Profit of Joint process 170600Related Questions
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