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.
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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Faustina Chemical Company manufactures three chemicals (TX14, NJ35, and KS63) from a joint process. The three chemicals are in
industrial grade form at the split-off point. They can either be sold at that point or processed further into the premium grade. Costs
related to each batch of this chemical process are as follows:
TX14
NJ35
KS63
Sales value at split-off point...
$16,000
$12,000
$5,000
Joint costs allocated to product...
$6,000
$15,000
$9,000
Sales value after further processing..
Cost of further processing..
$20,000
$18,000
$10,000
$5,000
$4,000
$2,000
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.
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