Exercise 20-11 Kirk Minerals processes materials extracted from mines. The most

Question

Exercise 20-11 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 $180,300 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 of Processed Product Spock Uhura Sulu Sales Value at Split-Off Point $209,700 299,700 455,000 Allocated Joint Costs $39,300 60,000 81,000 Cost to Process Further $109,600 $299,500 399,400 801,000 84,500 249,000 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 Uhura Sulu LINK TO TEXT

Explanation / Answer

a Spock Uhura Sulu Selling price after further processing 299500 399400 801000 Selling price at the split-off point 209700 299700 455000 Total incremental revenue 89800 99700 346000 Total incremental processing costs 109600 84500 249000 Total incremental profit or loss -19800 15200 97000 b Spock Sold as is Uhura Process further Sulu Process further

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