. Brockton Company produces products A, B, and C from a joint production process

Question

.   Brockton Company produces products A, B, and C from a joint production process. Each

        product may be sold at split-off or processed further. Joint production costs have been allocated

       to each product based on the number of each produced.

Product       Units Produced           Sales Value            Additional Sales Values and Costs if

                                                       At Split-off             ________Processed Further_______            

                                                                                      Sales Values                Added Costs

A                    6,000                       $ 75,000                  $100,000                       $24,000

B                    9,000                       $ 80,000                  $ 115,000                      $25,000

C                    4,000                       $ 48,000                  $   58,000                      $12,000

Which product(s) should be processed beyond the split-off point?

Explanation / Answer

Beyond the split-off point

Additional Sales Values   Additional Costs   Net Profit (loss)

A (100000-75000) 24000 1000

B (115000-80000) 25000 10000

C (58000-48000) 12000 (2000)

thus Product(s) A & B should be processed beyond the split-off point

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