Under these assumptions, the following product(s) should be processed further and then sold:
Oak View Chemicals produces two main products. M-10 and M-20, and one by-product, B-60, from a single input. Chem-X. Products M-10 and M-20 can either be sold at split-off or processed
further and sold. A given batch begins with 1,000 gallons of Chem-X with a cost of $90,000. Additional information regarding a batch follows.
| If processed further | ||||
| Product | Units produced | Units sales value at split off | Additional Cost(per unit) | Sales value(per unit) |
| M-10 | 20000 | $ 5.00 | $ 2.00 | $ 6.00 |
| M-20 | 14000 | $ 10.00 | $ 4.00 | $ 16.00 |
| B-60 | 5000 | $ 0.50 | NA | NA |
Oak View Chemicals uses the net realizable at split-off approach to allocate joint costs and treats the sales value of the by-product B-60 as other income.
Required
Under these assumptions, the following product(s) should be processed further and then sold:
a.M-10
b.M-20
c.Both M-10 and M-20
d. Neither M-10 nor M-20
e.Cannot tell from the information given.
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