Collie Company has a joint process that produces three products: R, D and A. Each product may be sold at split-off or processed further and then sold. Joint processing costs for a year amount to $300,000. Other relevant data are as follows: ProductSales ValueCosts afterSales Value at Split-OffSplit-Off at Completion $ $ $ R120,000 260,000 420,000 D80,000 140,000 190,000 A150,000 190,000 350,000 Required:a) Determine total net income if all products are sold at split-off point.b) Determine total net income if all products are sold after processing.c) Using incremental analysis determine which products should be sold at split-off point and which should be processed further.

When product can be further processed or can be sold at split off , then we need to consider the…

Answered: Collie Company has a joint process that…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Collie Company has a joint process that produces three products: R, D and A. Each product may be sold at split-off or processed further and then sold. Joint processing costs for a year amount to $300,000. Other relevant data are as follows:

Product	Sales Value	Costs after	Sales Value
	at Split-Off	Split-Off		at Completion
	$		$		$
R	120,000		260,000		420,000
D	80,000		140,000		190,000
A	150,000		190,000		350,000

Required:

a) Determine total net income if all products are sold at split-off point.

b) Determine total net income if all products are sold after processing.

c) Using incremental analysis determine which products should be sold at split-off point and which should be processed further.

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