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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Sell or Process Further. 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 19-, these products were processed beyond split-off. Joint production costs for the year were $60,000. Sales values and costs needed to evaluate Watkins' 19- production policy follow:
Additional Costs
If Processed Further
Product
Units
Produced
Sales Values at Split-Off
Sales Added
Values Costs
x . 6,000
y . 4,000
z . 2,000
$25,000
41,000
24,000
$42,000
45,000
32,000
$9,000
7,000
8,000
Joint costs are allocated to the products in proportion to the relative physi- cal volume of output.
Required: (1) For units of Product Z, the unit production cost most relevant to a sell, or process further, decision.
(2) The products the company should subject to additional processing in order to maximize profits.
(AICPA adapted)
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