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 $180,600 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			$209,000			$40,900			$109,200			$300,100
Uhura			299,100			59,700			85,900			399,500
Sulu			455,700			80,000			250,300			801,000

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		sold as isprocess further
Sulu		process furthersold as is

Answer 1

Particulars	Spock	Uhura	Sulu
Sales value of processed product	$ 300,100	$ 399,500	$ 801,000
Less: Sales value at split-off point	($ 209,000)	($ 299,100)	($ 455,700)
Incremental sales revenue after processing further	$ 91,100	$ 100,400	$ 345,300
Less : Cost to process further	($ 109,200)	($ 85,900)	($ 250,300)
Incremental profit (loss)	($ 18,100)	$ 14,500	$ 95,000
Spock	Sold as is
Uhura	Process further
Sulu	Process further