
Sell at Split-Off or Process Further
Eunice Company produces two products from a joint process. Joint costs are $70,000 for one batch, which yields 1,000 liters of germain and 4,000 liters of hastain. Germain can be sold at the split-off point for $24 or be processed further, into geraiten, at a
If geraiten is sold, additional distribution costs of $0.80 per liter and sales commissions of 10% of sales will be incurred. In addition, Eunice’s legal department is concerned about
Required:
- 1. CONCEPTUAL CONNECTION Considering only gross profit, should germain be sold at the split-off point or processed further?
- 2. CONCEPTUAL CONNECTION Taking a value-chain approach (by considering distribution, marketing, and after-the-sale costs), determine whether or not germain should be processed into geraiten.

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Chapter 8 Solutions
Managerial Accounting: The Cornerstone of Business Decision-Making
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