A company manufactures three products using the same production process. The cos

Question

A company manufactures three products using the same production process. The costs incurred up to the split-off point are $191,900. These costs are allocated to the products on the basis of their sales value at the split-off point. The number of units produced, the selling prices 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 4,570 $10.05 $14.73 $15,347 E 5,690 11.80 16.28 17,731 F 1,790 19.11 22.84 10,177

Explanation / Answer

D E F Incremental sales   (14.73 -10.05 ) *4570 21387.60     [(14.73 -10.05 ) *4570] 25491.2    [(16.28-11.8)*5690] 6676.7    [(22.84-19.11)*1790] less:Incremtnal cost -15347 -17731 -10177 incremental profit /(loss) 6040.6 7760.2 -3500.3

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