Question

A company manufactures three products using the same production process. The costs incurred up to the split-off point are $203,700. These costs are allocated to the products on the basis of their sales value at the split-off point. The number of units produced, the selling prices per unit of the three products at the split-off point and after further processing, and the additional processing costs are as follows.

Product		Number of Units Produced			Selling Price at Split-Off			Selling Price after Processing			Additional Processing Costs
D			3,930			$10.30			$14.60			$10,809
E			6,080			11.30			16.20			22,182
F			1,700			19.90			22.50			7,040

(b1)

Determine the incremental profit (loss) of each product(s). (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

		Product D		Product E		Product F
Incremental profit (loss)		$		$		$

(b2)

Which product(s) should be processed further and which should be sold at the split-off point?

Product D		process furthersold at the split-off point
Product E		process furthersold at the split-off point
Product F		sold at the split-off pointprocess further

Answer 1