A company manufactures three products using the same production process. The cos

Question

A company manufactures three products using the same production process. The costs incurred up to the split-off point are $193,600. These costs are allocated to the products on the basis of their sales value at the split-off point. The number of units produced, the selling prices per unit of the three products at the split-off point and after further processing, and the additional processing costs are as follows.

A company manufactures three products using the same production process. The costs incurred up to the split-off point are $193,600. These costs are allocated to the products on the basis of their sales value at the split-off point. The number of units produced, the selling prices per unit of the three products at the split-off point and after further processing, and the additional processing costs are as follows. Selling Price at Split-off $10.39 11.83 19.84 Selling Price after Processing Processing Costs Number of Additional ProductUnits Produced 4,090 6,170 1,680 $14.55 15.92 22.58 $11,015 17,265 7,323 (b1) Determine the incremental profit (loss) of each product(s). (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Product D Product E Product F Incremental profit (loss) 14380 20627 2665 (b2) Which product(s) should be processed further and which should be sold at the split-off point? Product Product E Product F S ess further cess further sold at the split

Explanation / Answer

a) Determine incremental profit (loss) :

b)

Product D Product E Product F Sales price after further processing 14.55 15.92 22.58 Sale price at split off point 10.39 11.83 19.84 Incremental price per unit 4.16 4.09 2.74 Unit 4090 6170 1680 Incremental revenue 17014.40 25235.30 4603.20 Incremental cost (11015) (17265) (7323) Incremental profit- 5999.40 7970.30 (2719.80)

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