Oakes Inc. manufactured 40, 000 gallons of Mononate and 60,000 gallons of Beracyl in a joint production process, incurring $250,000 of joint costs. Oakes allocates joint costs based on the physical volume of each product produced. Mononate and Beracyl can each be sold at the split-off point in a semifinished state or, alternatively, processed further. Additional data about the two products are as follows: Mononate Beracyl Sales price per gallon at split - off $7 $15 Sales price per gallon if processed further $10 $18 Variable production costs if processed further $125,000 $115,000 An assistant in the company's cost accounting department was overheard saying "...that when both joint and separable costs are considered, the firm has no business processing either product beyond the split-off point. The extra revenue is simply not worth the effort." Which of the following strategies should be recommended for Oakes? Mononate Beracyl a. Sell at split-off Sell at split - off b. Sell at split-off Process further c. Process further Sell at split-off d. Process further Process further
Oakes Inc. manufactured 40, 000 gallons of Mononate and 60,000 gallons of Beracyl in a joint production process, incurring $250,000 of joint costs. Oakes allocates joint costs based on the physical volume of each product produced. Mononate and Beracyl can each be sold at the split-off point in a semifinished state or, alternatively, processed further. Additional data about the two products are as follows: Mononate Beracyl Sales price per gallon at split - off $7 $15 Sales price per gallon if processed further $10 $18 Variable production costs if processed further $125,000 $115,000 An assistant in the company's cost accounting department was overheard saying "...that when both joint and separable costs are considered, the firm has no business processing either product beyond the split-off point. The extra revenue is simply not worth the effort." Which of the following strategies should be recommended for Oakes? Mononate Beracyl a. Sell at split-off Sell at split - off b. Sell at split-off Process further c. Process further Sell at split-off d. Process further Process further
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 4CMA: Oakes Inc. manufactured 40,000 gallons of Mononate and 60,000 gallons of Beracyl in a joint...
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![Oakes Inc. manufactured 40, 000 gallons of Mononate and 60,000
gallons of Beracyl in a joint production process, incurring $250,000 of
joint costs. Oakes allocates joint costs based on the physical volume of
each product produced. Mononate and Beracyl can each be sold at
the split-off point in a semifinished state or, alternatively, processed
further. Additional data about the two products are as follows:
Mononate Beracyl
Sales price per gallon at split - off $7 $15
Sales price per gallon if processed further $10 $18
Variable production costs if processed further $125,000 $115,000
An assistant in the company's cost accounting department was
overheard saying "...that when both joint and separable costs are
considered, the firm has no business processing either product
beyond the split-off point. The extra revenue is simply not worth the
effort." Which of the following strategies should be recommended for
Oakes?
Mononate Beracyl
a. Sell at split-off Sell at split - off
b. Sell at split-off Process further
c. Process further Sell at split-off
d. Process further Process further](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F76191fb4-714d-4386-aab4-fc6b7b640861%2Ff09c96c1-3d9c-4fe0-b271-36a24e74aa1e%2F8rzmqtq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Oakes Inc. manufactured 40, 000 gallons of Mononate and 60,000
gallons of Beracyl in a joint production process, incurring $250,000 of
joint costs. Oakes allocates joint costs based on the physical volume of
each product produced. Mononate and Beracyl can each be sold at
the split-off point in a semifinished state or, alternatively, processed
further. Additional data about the two products are as follows:
Mononate Beracyl
Sales price per gallon at split - off $7 $15
Sales price per gallon if processed further $10 $18
Variable production costs if processed further $125,000 $115,000
An assistant in the company's cost accounting department was
overheard saying "...that when both joint and separable costs are
considered, the firm has no business processing either product
beyond the split-off point. The extra revenue is simply not worth the
effort." Which of the following strategies should be recommended for
Oakes?
Mononate Beracyl
a. Sell at split-off Sell at split - off
b. Sell at split-off Process further
c. Process further Sell at split-off
d. Process further Process further
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