Question

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

Answer 1

OPTION - B AND C.

If you have any doubts please comment on the answer.