Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare

Question

Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $30,000 per ton, one-fourth of which is allocated to product X15. 6,000 units of product X15 are produced from each ton of clypton. The units can either be sold at the split-off point for $10.00 each, or processed further at a total cost of $13,000 and then sold for $13.33 each. Required: Should product X15 be processed further or sold at the split-off point?

Should be processed further. / Should be sold at the split off point.

Explanation / Answer

Statement showing computations Particulars Sell as is Process Further Incremental Sales As is = 6,000*10 Process Further = 6000*13.33                            60,000.00                            79,980.00                            19,980.00 Relevant Costs Costs to manufacture product X15 = 30,000*4                               7,500.00                               7,500.00                                            -   Further processing costs                            13,000.00                            13,000.00 Total Relevant costs                               7,500.00                            20,500.00                            13,000.00 Income (Loss)                            52,500.00                            59,480.00                               6,980.00 The company should process further

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.