Purchase Solution

Sold at split off or processed further

Not what you're looking for?

Ask Custom Question

Shynee Minerals processes materials extracted from mines. The most common raw material that it processes results in three joint products: Sarco, Barco, and Larco. Each of these products can be sold as is,r it can be processed further and sold for a higher price. The company incurrs joint costs of n$180,000 to process one batch of the raw material that produces the three joint products. The following cost and sales information is available for one batch of each product.

Sales Value at Allocated Cost to Process Sales Value of
Split-off Point Joint Cost Further Processed Product
___________ ___________ __________ ____________
Sarco $200,000 $40,000 $120,000 $300,000
Barco 300,000 60,000 89,000 400,000
Larco 400,000 80,000 250,000 800,000

Determine whether each of the three joint products should be sold as is, or processed further.

Purchase this Solution
Solution Summary

The solution explains how to decide if products should be sold at split off point or processed further

Solution Preview

In order to make the decision, we need to calculate the incremental profit = incremental revenue - incremental cost

Sarco - Incremental revenue = ...

Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

IPOs

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

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.

View More Free Quizzes
Related BrainMass Solutions

  • Products A, B, and C are produced from a single raw material input

    Product A can be sold at the split off point for $2 per unit, or it can be processed further at a cost of $12,500 and then sold for $5 per unit.

  • Sold at split off point or processed further

    Product B should be sold at split off point as there is a loss of $5,000 if it is processed further. The solution explains how to determine whether the products should be sold at split off point or processed further

  • Exercise 13-6 Sell or Process Further [LO6]

    Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities.

  • Processing Decision

    The 3 products can be sold at split-off or processed further into GrowK Super, GrowL Super and GrowG Super.

  • Joint products accounting for Lamont Industries

    As can be seen, the loss from further processing exceeds the loss incurred if banolide is sold at split-off point ($3,800 vs $3,200). It is recommended that the product be sold off at split off point without further processing.

  • Joint Products for Mussina Chemical Company

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

  • Determine whether to sell or process further

    be sold at split off point since the incremental revenue is less than incremental cost.

  • Multiple Choice

    $3 per unit can be processed further or sold at split-off; it makes no difference.

  • Incremental Analysis Net Income

    Each of the products can be sold at the split-off point or can be processed further and then sold for a higher price. Shown below are cost and selling price data for a recent period.

  • Managerial Accounting Production Costs

    Product P either can be sold at the split-off point for 4.75 per unit or it can be further processed and sold for 7.20 per unit. If P is processed further, additional processing costs of 3.10 per unit will be incurred.

View More Related Solutions