Question

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 $179,400 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			$209,700			$40,000			$109,600			$300,900
Uhura			300,000			60,200			84,900			399,900
Sulu			455,500			79,200			249,500			800,500

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		process furthersold as is
Uhura		process furthersold as is
Sulu		sold as isprocess further

Answer 1

Incremental analysis

	Spock	Uhura	Sulu
Revenue after further processing	300900	399900	800500
Revenue at split off	209700	300000	455500
Incremental revenue	91200	99900	345000
Incremental cost	109600	84900	249500
Incremental profit (loss)	-18400	15000	95500

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

Spock		sold as is
Uhura		process further
Sulu		process further