Scotty Limited have made two special skin oils for many years from the same process. These are called Nova Oil and Neptune Oil. The Joint processing costs of £150,000 incurred up-to the split-off point. At the split-off point, they get 10,0000 Litres of Nova Oil 50,000 Litres of Neptune Oil Joint Cost £100,000 Selling prices at split-off point Nova Oil £1.25 per litre Neptune Oil £2.00 per litre Nova Oil can be processed further to produce: 60,000 Litres of SuperNova Oil SuperNova will cost extra fixed cost of: £20,000 Also, an extra variable cost of: £0.45 Per litre of input The sales price of SuperNova is: £3 Per litre What will be the incremental profit of Scotty Limited for the profit-maximising option? Choose one from the following: A. £6,000 Loss B. £11,000 Loss C. £10,000 Profit D. £5,000 Profit
- Scotty Limited have made two special skin oils for many years from the same process. These are called Nova Oil and Neptune Oil. The Joint
processing costs of £150,000 incurred up-to the split-off point.
At the split-off point, they get
10,0000 Litres of Nova Oil 50,000 Litres of Neptune Oil
Joint Cost £100,000
Selling prices at split-off point
Nova Oil £1.25 per litre
Neptune Oil £2.00 per litre
Nova Oil can be processed further to produce: 60,000 Litres of SuperNova Oil
SuperNova will cost extra fixed cost of: £20,000
Also, an extra variable cost of: £0.45 Per litre of input
The sales price of SuperNova is: £3 Per litre
What will be the incremental profit of Scotty Limited for the profit-maximising option?
Choose one from the following:
A. £6,000 Loss
B. £11,000 Loss
C. £10,000 Profit
D. £5,000 Profit
Split Off point
It is the point where different identifiable products are separated in manufacturing process .It is worthwhile to process product further If incremental cost is less than incremental revenue.
Product can be sold at the split off point if it is not worthwhile.
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