Solex Company manufactures three products from a common input in a joint process

Question

Solex Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $96,000 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: product X $53,000: product Y, $92.000: and product Z, $64,000. proc value after further processing for each product (on an annual basis) are shown below Each product may be sold at the split-off point or processed further Additional essing requires no special facilities. The additional processing costs and the sales itionalSales Value after Processing Further Processing s 82.000 $159,000 s 84,000 35.000 36.000 S $ 9000 Compute the incremental profit (loss) for each product Sales value at split-off point of

Explanation / Answer

Product

X

Y

Z

sales after further processing

82000

159000

84000

sales value at split off point

53000

92000

64000

incremental revenue

29000

67000

20000

cost of further processing

35000

36000

9000

incremental profit /loss

-6000

31000

11000

Product

X

Y

Z

sales after further processing

82000

159000

84000

sales value at split off point

53000

92000

64000

incremental revenue

29000

67000

20000

cost of further processing

35000

36000

9000

incremental profit /loss

-6000

31000

11000

Product

X

Y

Z

sales after further processing

82000

159000

84000

sales value at split off point

53000

92000

64000

incremental revenue

29000

67000

20000

cost of further processing

35000

36000

9000

incremental profit /loss

-6000

31000

11000

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