I need detailed and clear answers for all parts there PLEASE, I would rather the
ID: 2525914 • Letter: I
Question
I need detailed and clear answers for all parts there PLEASE, I would rather the answers be typed than hand-written
y Company currently produces the roducts from a joint process The joins pea as total costs of $500,000 per month. All three products, A, B & C are m they come out of the joint process. Alternatively, any of the products could co additional processing and be sold as a more complete product. You mu all calculations to receive full credit. (15 points) The following information is available: saleable as with continue on ust show your your work for work for n is availCaree oing Units Immediate Later Sals Unit Cost 40,000 $10 80,000 $25 Sales Price $15 $5$30 $24 of Further Price Processing S6 $4 100,000 | $22 $3 A) Should Product A be sold immediately or sold after processing further? If processed further, what will be the effect on net income? S Increase or decrease B) Should Product B be sold immediately or sold after processing further If processed further, what will be the effect on net income? S Increase or decrease diately or sold after processing further? C) Should Product C be ncome? s If processed further, what will be the effect on net i Increase or decreaseExplanation / Answer
Net income if three product sold immediately:
Total Income $4600,000
Joint Cost $500,000
Net Income $4100,000
A) Product A should be sold immediately.
If sold after further processing: Decrease in net income per unit = ($15-$10) - $6 = $1 per unit. Decrease in net income = $1 * 40000 units = $40000
B) Product B should be sold after further processing.
If sold after further processing: Increase in net income per unit = ($30-$25) - $4 = $1 per unit. Increase in net income = $1 * 80000 units = $80000
C) Product C should be sold immediately.
If sold after further processing: Decrease in net income per unit = ($24-$22) - $3 = $1 per unit. Decrease in net income = $1 * 100000 units = $100000.
Total Net income if product A&C sold immediately and B sold after further processing:
Total Income : $5000,000
Further processing cost of B : $ 320,000
Joint Cost : $500,000
Net Income : $4180,000
Units Sale price Total A 40000 10 400000 B 80000 25 2000000 C 100000 22 2200000 4600000Related Questions
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