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: Using incremental analysis determine which products should be sold at split-off point and which should be processed further.
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: Using incremental analysis determine which products should be sold at split-off point and which should be processed further.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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
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:
Using incremental analysis determine which products should be sold at split-off point and which should be processed further.
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