Question

In a joint processing operation, Nolen Company manufactures three grades of sugar from a common input, sugar cane. Joint processing costs up to the split-off point total $82,000 per year. The company allocates these costs to the joint products on the basis of their total sales value at the split-off point. These sales values are as follows: raw sugar, $41,000; brown sugar, $44,500; and white sugar, $50,250.

     Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities. The additional processing costs and the sales value after further processing for each product (on an annual basis) are shown below:

Product	Additional Processing Costs			Sales Value
Raw sugar	$	43,550		$	82,000
Brown sugar	$	29,800		$	76,750
White sugar	$	30,750		$	98,500

Required:
a.	Compute the Incremental profit (loss) for Brown Sugar (Loss amounts should be indicated by a minus sign.)

Answer:

Select the product or products that should be processed further

Select one or more:

a. Brown Sugar

b. White Sugar

c. Raw Sugar

Answer 1