Q 2 Attawfik Co. makes the molded metal parts for three model car kits, X, Y & Z
ID: 2598399 • Letter: Q
Question
Q 2 Attawfik Co. makes the molded metal parts for three model car kits, X, Y & Z from a joint production process. The joint costs of this process are $350,000.
In each case, Attawfik Co. could decide to make the entire kit rather than just the metal parts.
Information about the sales values and separable costs for each kit is given below.
Determine which kits Attawfik Co. should sell at the split-off point and which kits Attwafik Co. should process further.
Kit
Final Sales Value
Sales Value at Spilt-off
Separable costs
X
400,000
350,000
40,000
Y
220,000
120,000
140,000
Z
180,000
60,000
100,000
Kit
Final Sales Value
Sales Value at Spilt-off
Separable costs
X
400,000
350,000
40,000
Y
220,000
120,000
140,000
Z
180,000
60,000
100,000
Explanation / Answer
X Y Z Final Sales Value 400000 220000 180000 Sales Value at Spilt-off 350000 120000 60000 Incremental revenue 50000 100000 120000 Separable costs 40000 140000 100000 Incremental income(loss) 10000 -40000 20000 Kit Y should be sold at the split-off point Kit X and Z should be processed further
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