Two products, TD and IB, emerge from a joint process. Product TD has been alloca

Question

Two products, TD and IB, emerge from a joint process. Product TD has been allocated $31,200 of the total joint costs of $48,000. A total of 5,000 units of product TD are produced from the joint process. Product TD can be sold at the split-off point for $24 per unit, or it can be processed further for an additional total cost of $15,000 and then sold for $26 per unit. If product TD is processed further and sold, what would be the effect on the overall profit of the company compared with sale in its unprocessed form directly after the split-off point?

1. a. $5,000 less profit
2. b. $115,000 more profit
3. c. $36,200 less profit
4. d. $26,200 more profit

Explanation / Answer

(26-24)*5000-15000= 5,000 less profit (a).

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