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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