Faustina Chemical Company manufactures three chemicals (TX14, NJ35, and KS63) from a joint process. The three chemicals are inindustrial grade form at the split-off point. They can either be sold at that point or processed further into the premium grade. Costsrelated to each batch of this chemical process are as follows:TX14NJ35KS63Sales value at split-off point...$16,000$12,000$5,000Joint costs allocated to product...$6,000$15,000$9,000Sales value after further processing..Cost of further processing..$20,000$18,000$10,000$5,000$4,000$2,000For which product(s) above would it be more profitable for Faustina to sell at the split-off point rather than process further? Justifyyour answer with calculations.

Here, we have to find out the most profitable product. TX14 NJ35 KS63 Sales value after further processing 20,000 18,000 10,000 Less: Sales value at split off point 16000 12000 5000 Incremental revenue from further processing 4000 6000 5000 Cost of further processing 5000 4000 2000 Financial advantage (disadvantage) (1000) 2000 3000So, product TX14 should be sold at split off point and product NJ35 and KS63 should be further processed.

Answered: For which product(s) above would it be…

Business

Accounting

For which product(s) above would it be more profitable for Faustina to sell at the split-off point rather than process further? Justify your answer with calculations.

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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