Duffy Limited have made two special skin oils for many years from the same process. These are called Nova Oil and Neptune Oil. The Joint processing costs of £150,000 incurred up-to the split-off point. At the split-off point, they get 100000 Litres of Nova Oil and 50000 Litres of Neptune oil Selling Prices at split-off point Joint cost £100,000 Nova Oil £1.25 per litre Neptune £2.00 per litre Nova Oil can be processed further to produce 60000 litres of SuperNova oil SuperNova will cost extra fixed cost of : £20,000 Also, an extra variable cost of : £0.45 per litre of input The sales price of SuperNova is: £3 per litre What will be the incremental profit of Duffy Limited for the profit-maximizing option?
Duffy Limited have made two special skin oils for many years from the same process. These are called Nova Oil and Neptune Oil. The Joint processing costs of £150,000 incurred up-to the split-off point. At the split-off point, they get 100000 Litres of Nova Oil and 50000 Litres of Neptune oil Selling Prices at split-off point Joint cost £100,000 Nova Oil £1.25 per litre Neptune £2.00 per litre Nova Oil can be processed further to produce 60000 litres of SuperNova oil SuperNova will cost extra fixed cost of : £20,000 Also, an extra variable cost of : £0.45 per litre of input The sales price of SuperNova is: £3 per litre What will be the incremental profit of Duffy Limited for the profit-maximizing option?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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- Duffy Limited have made two special skin oils for many years from the same process. These are called Nova Oil and Neptune Oil. The Joint
processing costs of £150,000 incurred up-to the split-off point.
|
At the split-off point, they get |
||||
|
100000 |
Litres of Nova Oil |
and |
50000 |
Litres of Neptune oil |
|
Selling Prices at split-off point |
Joint cost |
£100,000 |
||
|
Nova Oil |
£1.25 |
per litre |
||
|
Neptune |
£2.00 |
per litre |
||
|
Nova Oil can be processed further to produce |
60000 |
litres of SuperNova oil |
||
|
SuperNova will cost extra fixed cost of : |
£20,000 |
|||
|
Also, an extra variable cost of : |
£0.45 |
per litre of input |
||
|
The sales price of SuperNova is: |
£3 |
per litre |
What will be the incremental profit of Duffy Limited for the profit-maximizing option?
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