Victoria Company Victoria Company manufactures three products in a joint process
ID: 2530985 • Letter: V
Question
Victoria Company
Victoria Company manufactures three products in a joint process which costs $25,000. Each product can be sold at split-off or processed further and then sold. 10,000 units of each product are manufactured. The following information is available for the three products:
Product
Sales Value
at Split-off
Separable Processing
Costs after Split-off
Sales Value
at Completion
A
$12
$9
$21
B
10
4
17
C
15
6
19
a. If Product A is processed beyond the split-off point, profit will:
increase by $210,000
increase by $120,000
increase by $ 90,000
remain unchanged
b. To maximize profits, which products should Victoria process further?
Product A only
Product B only
Product C only
Products A, B, and C
Product
Sales Value
at Split-off
Separable Processing
Costs after Split-off
Sales Value
at Completion
A
$12
$9
$21
B
10
4
17
C
15
6
19
Explanation / Answer
a) Product A :
so answer is d) Remain unchanged
b) Determine which product should process further :
Product A = 21-12-9 = 0
Product B = 17-10-4 = 3
Product C = 19-15-6 = -2
So answer is b) Product B only
Sale value after completion 21 Sale value at split off point 12 Incremental sale price 9 Incremental cost 9 Incremental profit and loss NoneRelated Questions
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