Should watkins subject to additional processing

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From a particular joint process, Watkins Company produces three products, X, Y, and Z.Each product may be sold at the point of split-off or processed further. Additional processing

requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. In 19x1, all three products were processed beyond split-off. Joint production costs for the year were $60,000. Sales values and costs needed to evaluate Watkins's 19x1 production policy follow:




Additional Costs and Sales Values




If Processed Further


Units

Sales Values

Sales

Added

Product

Produced

at Split-Off

Values

Costs

X

6,000

$25,000

$42,000

$9,000

Y

4,000

41,000

45,000

7,000

Z

2,000

24,000

32,000

8,000

Joint costs are allocated to the products in proportion to the relative physical volume of output. Which of the products X, Y, and Z should Watkins subject to additional processing in order to maximize profits?

Reference no: EM13511705

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