In a joint processing operation, Nolen Company manufactures three grades of sugar from a common input, sugar cane. Joint processing costs up to the split-off point total $41,900 per year. The company allocates these costs to the joint products on the basis of their total sales value at the split-off point. These sales values are as follows: raw sugar, $22,400; brown sugar, $22,400; and white sugar, $21,200. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities. The additional processing costs and the sales value after further processing for each product (on an annual basis) are shown below: Product Raw sugar Additional Processing Costs Sales Value $ 20,300 $40,900 Brown sugar $ 13,600 $37,000 white sugar $ 7,000 $41,600 Required: a. Compute the Incremental profit (loss) for each product. (Loss amounts should be indicated by a minus sign.) Raw Sugar Brown Sugar White Sugar Incremental profit (loss) b. Which product or products should be sold at the split-off point? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) Raw sugar Brown sugar White sugar c. Which product or products should be processed further? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) Raw sugar Brown sugar White sugar
In a joint processing operation, Nolen Company manufactures three grades of sugar from a common input, sugar cane. Joint processing costs up to the split-off point total $41,900 per year. The company allocates these costs to the joint products on the basis of their total sales value at the split-off point. These sales values are as follows: raw sugar, $22,400; brown sugar, $22,400; and white sugar, $21,200. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities. The additional processing costs and the sales value after further processing for each product (on an annual basis) are shown below: Product Raw sugar Additional Processing Costs Sales Value $ 20,300 $40,900 Brown sugar $ 13,600 $37,000 white sugar $ 7,000 $41,600 Required: a. Compute the Incremental profit (loss) for each product. (Loss amounts should be indicated by a minus sign.) Raw Sugar Brown Sugar White Sugar Incremental profit (loss) b. Which product or products should be sold at the split-off point? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) Raw sugar Brown sugar White sugar c. Which product or products should be processed further? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) Raw sugar Brown sugar White sugar
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:In a joint processing operation, Nolen Company manufactures three grades of sugar from a common input, sugar cane. Joint
processing costs up to the split-off point total $41,900 per year. The company allocates these costs to the joint products on the basis
of their total sales value at the split-off point. These sales values are as follows: raw sugar, $22,400; brown sugar, $22,400; and white
sugar, $21,200.
Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities. The additional
processing costs and the sales value after further processing for each product (on an annual basis) are shown below:
Product
Raw sugar
Additional
Processing Costs
Sales
Value
$ 20,300
$40,900
Brown sugar
$ 13,600
$37,000
white sugar
$ 7,000
$41,600
Required:
a. Compute the Incremental profit (loss) for each product. (Loss amounts should be indicated by a minus sign.)
Raw Sugar
Brown Sugar
White Sugar
Incremental profit (loss)
b. Which product or products should be sold at the split-off point? (You may select more than one answer. Single click the box with
the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box
for a wrong answer.)
Raw sugar
Brown sugar
White sugar
c. Which product or products should be processed further? (You may select more than one answer. Single click the box with the
question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for
a wrong answer.)
Raw sugar
Brown sugar
White sugar
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