Solex Company manufactures three products from a common input in a joint process
ID: 2465996 • Letter: S
Question
Solex Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $90,000 per year. The company allocates these costs to the joint products on the basis of their total sales value at the split-off point. These sales values are as follows: product X, $50,000; product Y, $92,000; and product Z, $61,000. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities. The additional processing costs and the sales value after further processing for each product (on an annual basis) are shown below: Compute the incremental profit (loss) for each product. (Loss amounts should be indicated with a minus sign.) Which product or products should be sold at the split-off point? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) Product X Product Y Product ZExplanation / Answer
Product
Sales Price After Further Processing
Sale Value @ split off Point
Incremental reveue
Incremental Cost
Net Profit
X
76,000
50,000
26,000
38,000
(12,000)
Y
161,000
92,000
69,000
36,000
33,000
Z
80,000
61,000
19,000
10,000
9,000
Product X should be sold at split off point as there is loss by further processig
Product
Sales Price After Further Processing
Sale Value @ split off Point
Incremental reveue
Incremental Cost
Net Profit
X
76,000
50,000
26,000
38,000
(12,000)
Y
161,000
92,000
69,000
36,000
33,000
Z
80,000
61,000
19,000
10,000
9,000
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