Question

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			4,470			$10.21			$15.09			$15,733
E			5,500			11.59			16.61			19,910
F			1,710			19.71			22.75			8,299

(b1)

Determine the incremental profit (loss) of each product(s).

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		sold at the split-off pointprocess further
Product F		sold at the split-off pointprocess further

Answer 1

Incremental profit (loss)

	Product D	Product E	Product F
Selling price after further processing	15.09	16.61	22.75
Selling price at split off	10.21	11.59	19.71
Incremental price	4.88	5.02	3.04
Quantity	4470	5500	1710
Incremental revenue	21813.60	27610	5198
Additional Cost	-15733	-19910	-8299
Financial Advantage	6081	7700	-3101

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

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