KENTUCKY Corporation makes two products, X and Y, from a joint input that have t
ID: 2524548 • Letter: K
Question
KENTUCKY Corporation makes two products, X and Y, from a joint input that have the following information:
Sales Value
Total
Sales Value
Units
per unit at
Additional
per unit after
Produced
split-off point
Processing Costs
additional processing
Product X
50,000
$10
$400,000
$15
Product Y
30,000
$8
$300,000
$20
The joint cost incurred to produce the two products up to the current point is $600,000.
Required:
Which cost is sunk in this situation? Why?
Sales Value
Total
Sales Value
Units
per unit at
Additional
per unit after
Produced
split-off point
Processing Costs
additional processing
Product X
50,000
$10
$400,000
$15
Product Y
30,000
$8
$300,000
$20
Explanation / Answer
The joint cost incurred to produce the two products up to the current point of $600000 is sunk in this situation as this cost has already been incurred and is irrelevant in the situation.
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