Reference no: EM132598480
A company produces three products after joint processing. Those products can be sold at split-off point or process further. Joint costs are allocated to products based on the relative fair market value at split-off point.
The joint costs are $100,000. Assume the following at split-off point:
Product A - 4,000 units with a retail value of $4.00 per unit
Product B - 5,000 units with a retail value of $6.00 per unit
Product C - 10,000 units with a retail price of $8.00 per unit.
Assume also that with $20,000 of further processing costs, Product A can be sold for $8.00 per unit; with $30,000 additional processing costs, Product B can be sold for $14.00 per unit; and Product C can be further processed for $15,000 and then sold for $9.00 per unit.
Question 1: If the company is a profit maximizer and is ready to sell Product C in its most profitable format, what would be the inventory value for those 10,000 units?
A. $63,492
B. $78,492
C. $15,000
D. $93,492
E. Some other amount
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