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Category > Accounting Posted 24 Aug 2017 My Price 9.00

Solex Company

EXERCISE 12–7 Sell or Process Further [LO7]

Solex Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $100,000 per year. The company allocates these costs to the joint products on the basis of their total sales value at the split-off point. These sales values are as follows: product X, $50,000; product Y, $90,000; and product Z, $60,000.

Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities. The additional processing costs and the sales value after further pro- cessing for each product (on an annual basis) are shown below:

 

 

 

 

X . . . . . . . . .

$35,000

$80,000

Y . . . . . . . . .

$40,000

$150,000

Z . . . . . . . . .

$12,000

$75,000

 

Required:

Which product or products should be sold at the split-off point, and which product or products should be processed further? Show computations.

Answers

Maurice Tutor
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Status NEW Posted 24 Aug 2017 11:08 PM My Price 9.00

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