Question

Exercise 20-11 Kirk Minerals processes materials extracted from mines. The most common raw material that it processes results in three joint products: Spock, Uhura, and Sulu. Each of these products can be sold as is, or each can be processed further and sold for a higher price. The company incurs joint costs of $179,700 to process one batch of the raw material that produces the three joint products. The following cost and sales information is available for one batch of each product.

		Sales Value at Split-Off Point			Allocated Joint Costs			Cost to Process Further			Sales Value of Processed Product
Spock			$210,000			$40,700			$110,200			$299,000
Uhura			299,600			59,400			84,900			399,300
Sulu			454,500			79,600			249,900			800,900

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

		Spock		Uhura		Sulu
Incremental profit (loss)		$		$		$

Indicate whether each of the three joint products should be sold as is, or processed further.

Spock
Uhura
Sulu

Answer 1

	Spock	Uhura	Sulu
Sales Value-processed	$ 299,000.00	$ 399,300.00	$ 800,900.00
Less: Sales Value at Split-Off Point	$ 210,000.00	$ 299,600.00	$ 454,500.00
Incremental Revenue	$   89,000.00	$   99,700.00	$ 346,400.00
Less: Incremental cost	$ 110,200.00	$   84,900.00	$ 249,900.00
Incremental profit (loss)	$ (21,200.00)	$   14,800.00	$   96,500.00
Indicate whether each of the three joint products should be sold as is, or processed further.
Spock	Sell
Uhura	Processed  Further
Sulu	Processed  Further