Purchase Solution

Joint Products for Mussina Chemical Company

Not what you're looking for?

Ask Custom Question

The Mussina Chemical Company produced three joint products at a joint cost of $117,000. These products were processed further and sold as follows.

Chemical product Sales Additional processing Costs
A $230,000 $190,000
B 330,000 300,000
C 175,000 100,000

The company has had an opportunity to sell at split off directlly to other processors. If that alternative had been selected, sales would have been A, $54,000; B, $28,000;and C, $54,000.

The company expects to operate at the same level of production and sales in the forthcoming year.

Consider all the available information, and assume that all costs incurred after split off are variable.

1. Could the company increase operating income by altering its processing decisions?

2. Which products should be processed further and which should be sold at split off?

Purchase this Solution

Solution Summary

The solution explains which products should be processed further and which should be sold at split-off point.

Solution Preview

Please see the attached file. Chemical A results in a loss if it is processed further. The incremental sales for A ...

Purchase this Solution


Free BrainMass Quizzes
Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.