Profit from Processing Further Deaton Corporation manufactures products A, B, an

Question

Profit from Processing Further Deaton Corporation manufactures products A, B, and C from a joint process. Joint costs are allocated on the basis of relative sales value at the split-off point. Additional information for Deaton Corporation follows: A B C Total Units produced 13,000 9,000 5,000 27,000 Joint costs $ 154,000 $ 70,000 $ 77,600 $ 301,600 Sales value before additional processing 250,000 110,000 70,000 430,000 Additional costs for further processing 33,000 30,000 22,000 85,000 Sales value if processed further 300,000 140,000 89,000 529,000

Required: 2a. Calculate the differential benefit (loss) for products A, B, and C. (Loss amounts should be indicated with a minus sign.)

2b. Which, if any, of products A, B, and C should be processed further and then sold? Product A Product B Product C None of the above All of the above

Explanation / Answer

ANSWER IS A

A B C sales value before further processing 250000 110000 70000 additional cost for further processing 33000 30000 22000 283000 140000 92000 sales value if processed further 300000 140000 89000 difference 17000 0 -3000 PRODUCTS FURTHER PROCESS FURTHER PROCESSED INDIFFERENT NO PROCESSING

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