A manufacturing company that produces a single product has Provided the followin

Question

A manufacturing company that produces a single product has Provided the following data concerning its most recent month of operations: What is the total period cost for the month under variable costing? Two products, B and H, emerge from a joint process. Product B has been allocated $36,300 of the total joint casts of $57,000. A total of 3,100 units of product B are produced from the joint process. Product B can be sold at the split-off point for $13 per unit, or it can be processed further for an additional total cost of $11,100 and then sold for $15 per unit. If product B 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?

Explanation / Answer

The total period cost for the month under the variable costing approach is the number of units multiplied by the variable cost per unit. In this case we have: (51+51+6+4)*11200 1254400 At Split Off Point After Further Processing Sales 40300 46500 Less:Cost 36300 36300 Less:Additional Cost 0 11100 Profit 4000 -900 $4900 less Profit

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