25) Walman Corp. manufactures products X, Y, and Z from a joint production proce

Question

25) Walman Corp. manufactures products X, Y, and Z from a joint production process. Joint costs are allocated to products on the basis of relative sales value at the split-off point. Additional information is as follows: Z Total 14,0001 10,0001 6,0001 30.000 $204,000! $90,0001 $66,0001 $360,000 600,000 38,0001 30,000 22,000 90,000 Units produced oint costs Sales value at split-off 340,000 150,000 Additional costs for further processing Sales value if processed further 348,0001 185,000 147,0001 680,000 Based solely on a relevant cost analysis, which of the three products should be manufactured by Walman beyond the split-off point? A) Only X B) Only Y and Z C) All three products: X, Y and Z D) Only Y E) Only Z

Explanation / Answer

Answer 25-B. Only Y and Z X Y Z Sale value if Processed Further          348,000          185,000          147,000 Additional Cost for further processing            38,000            30,000            22,000          310,000          155,000          125,000 Less: Sales Value at Split Off          340,000          150,000          110,000 Incremental Profit (Loss)          (30,000)              5,000            15,000 Process Further No Yes Yes Answer 14 - d. $60,000

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