Moore Manufacturing Ltd makes two products from a common input. Joint processing

Question

Moore Manufacturing Ltd makes two products from a common input. Joint processing costs up to the split-off point total $23,400. The company allocates the joint costs to the products on the basis of their total sales values at split-off. The total sales value at split-off for both products is the same. Each product may be sold at the split-off point or processed further. Data concerning one of these products are as follows $15,000 10,000 30,000 Sales value at split-off Cost of further processing Sales value after further processing What is the minimum amount the company would accept for this product if it is to be sold at the split-off point? Select one O $10,000 O $21,700 O $20,000 O $26,700

Explanation / Answer

Minimum Amount at split off point is not less favourable than the amount sold after further processing

Sale Value after Further processing $30000

Cost of further processing $10000

Minimumt to be charged at split off point $20000

Hence option (c) is correct, because at this point company make equal profit even product sold after further processing

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