Exercise 7-12 A company manufactures three products using the same production pr

Question

Exercise 7-12 A company manufactures three products using the same production process. The costs incurred up to the split-off point are $197,400. 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 Number of Units Produced 4,190 5,770 2,360 Selling Price after Processing $15.45 15.91 22.69 Additional Processing Costs $15,998 17,383 Selling Price Product at Spli t-off $10.20 11.53 19.82 9,493 (bl) Determine the incremental profit (loss) of each product(s). (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Product D Product E Product F Incremental profit (loss) (b2) Which product(s) should be processed further and which should be sold at the split-off point? Product D Product E Product F

Explanation / Answer

Product D Product E Product F Selling price after processing 64736 91801 53548 Selling price at split off point 42738 66528 46775 Incremental revenue 21998 25273 6773 Additional processing costs 15998 17383 9493 Incremental profit(loss) 6000 7890 -2720 Product D Process further Product E Process further Product F Sell at split off point

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