l0 PROBLEM 4. (20 points) Monsters Inc. manufactures products Mike and Sull y fr

Question

l0 PROBLEM 4. (20 points) Monsters Inc. manufactures products Mike and Sull y from Although Monsters Inc, can sell the intermediate products at split-ofm orocesses cach product further and sell the final product after individ cach one. Production, sales, and cost data for a recent month follow belwividually pr a joint ocessing Refe net r of th int, the company c) normally processes cach 4,000 3,000 Mil Units produced Joint cost allocation 7,000 $40,000 Sales value at split-off Additional costs ifprocessed S70,000 $30,000 $100,000 $10,000 $77,000 further $5,000S15,000 $38,000 $115,000 Sales value if processed further

Explanation / Answer

Joint cost allocation to Mike and Sully

Total joint cost = 40,000

Mike praportion = 40,000*4000/7000 = 22,857

Sully praportion = 40,000*3000/7000 = 17,143

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