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Determine which products should be processed further

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Reference no: EM132603149

A company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $98,000 per quarter. The company allocates these costs to the joint products on the basis of their relative sales value at the split-off point.

Unit selling prices and total output at the split-off point are as follows:

Product                  Selling Price                  Quarterly Output

A                         $4 per pound                 10,000 pounds

B                         $6 per pound                 22,000 pounds

C                          $12 per gallon                       5,000 gallons

Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below:

Product         Additional              Selling Price

                           Processing             Costs

A                    $53,000              $7 per pound

B                      $38,000           $11 per pound

C                        $18,000          $18 per gallon

Question 1: Which products should be processed further?

Multiple Choice

Option 1: A and B

Option 2: B and C

Option 3: A, B, and C

Option 4: A and C

Reference no: EM132603149

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