Question

Gusler company manufactures three products from a common input in a joint processing operation. Joint processing...

Gusler 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

$

3

per pound

10,000

pounds

B

$

6

per pound

22,000

pounds

C

$

14

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
Processing Costs

Selling Price

A

$

53,000

$

7

per pound

B

$

38,000

$

11

per pound

C

$

18,000

$

20

per gallon

Which products should be processed further?

- A and C

- A and B

- A,B and C

- B and C

Homework Answers

Answer #1

OPTION - B AND C.

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