Cat Company produces products C, A, and T from a joint production process. Each product may be sold at the split-off point or be processed further. Joint production costs of $75,000 per year are allocated to the products based on the relative number of units produced. Data for Cat's operations for the current year are as follows: Units Allocated Joint Sales Value Product Produced Production Cost At Split-off C 12,000 $23,000 $80,000 A 8,000 34,000 71,000 T 13,000 18,000 51,000 Product C can be processed beyond the split-off point for an additional cost of $29,000 and can then be sold for $103,000. Product A can be processed beyond the split-off point for an additional cost of $31,000 and can then be sold for $116,000. Product T can be processed beyond the split-off point for an additional cost of $17,000 and can then be sold for $65,000. Which products should be processed beyond the split-off point? (Show all calculations) What is a joint product cost? Explain in your own words.
Cat Company produces products C, A, and T from a joint production process. Each product may be sold at the split-off point or be processed further. Joint production costs of $75,000 per year are allocated to the products based on the relative number of units produced. Data for Cat's operations for the current year are as follows: Units Allocated Joint Sales Value Product Produced Production Cost At Split-off C 12,000 $23,000 $80,000 A 8,000 34,000 71,000 T 13,000 18,000 51,000 Product C can be processed beyond the split-off point for an additional cost of $29,000 and can then be sold for $103,000. Product A can be processed beyond the split-off point for an additional cost of $31,000 and can then be sold for $116,000. Product T can be processed beyond the split-off point for an additional cost of $17,000 and can then be sold for $65,000.
- Which products should be processed beyond the split-off point? (Show all calculations)
- What is a joint product cost? Explain in your own words.
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