General Chemical Company (GCC) manufactures two products as part of a joint proc

Question

General Chemical Company (GCC) manufactures two products as part of a joint process: A1 and B1. Joint costs up to the split-off point total $25,500. The joint costs are allocated to A1 and B1 in proportion to their relative sales values. At the split-off point, product A1 can be sold for $39,200, whereas product B1 can be sold for $72,800. Product A1 can be processed further to make product A2, at an incremental cost of $41,500. A2 can be sold for $88,500. Product B1 can be processed further to make product B2, at an incremental cost of $51,500. B2 can be sold for $98,500.

1. Joint costs allocated to product A1 total:

$8,925.

$16,575.

$12,750.

$25,500.

2. Joint costs allocated to product B1 total:

$8,925.

$16,575.

$12,750.

$25,500.

3. The net change in operating income resulting from a decision to manufacture product A2 is:

$49,300 (increase).

$7,800 (decrease).

$7,800 (increase).

$41,500 (increase).

4. The net change in operating income resulting from a decision to manufacture product B2 is:

$25,800 (increase).

$25,800 (decrease).

$51,500 (decrease).

$25,700 (increase).

1. Joint costs allocated to product A1 total:

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount Sale Value o product A1                 39,200.00 Sale Value o product B1                 72,800.00 Total Sales Value               112,000.00 1) Joint costs allocated to product A1 = 39200/112000*25,500                   8,925.00 2) Joint costs allocated to product B1 = 72800/112000*25,500                 16,575.00 3) 4) Product A2 Product B2 Sales value after further processing                 88,500.00            98,500.00 Sales value at split off point               (39,200.00)         (72,800.00) Total Incremental Revenue                 49,300.00            25,700.00 Total Incremental Processing costs               (41,500.00)         (51,500.00) Total Incremental profit or loss                   7,800.00         (25,800.00)

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