John Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total P100,000 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: Product A, P50,000; Product B P90,000; and Product C, P60,000. 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 Additional Processing Costs Sales Value A P35,000 P80,000 40,000 150,000 C 12,000 75,000 Requirement: Which product or products should be sold at the split off point and which product or products should be processed further. Show computation.
John Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total P100,000 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: Product A, P50,000; Product B P90,000; and Product C, P60,000. 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 Additional Processing Costs Sales Value A P35,000 P80,000 40,000 150,000 C 12,000 75,000 Requirement: Which product or products should be sold at the split off point and which product or products should be processed further. Show computation.
Chapter1: Financial Statements And Business Decisions
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Question 1:
John Company manufactures three products from a common input in a joint processing operation. Joint
processing costs up to the split-off point total P100,000 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: Product A, P50,000; Product B P90,000; and Product C, P60,000.
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
Additional Processing Costs
Sales Value
A
P35,000
P80,000
40,000
150,000
C
12,000
75,000
Requirement:
Which product or products should be sold at the split off point and which product or products should be
processed further. Show computation.
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