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Sold at split off point or processed further

Please see attached problem.

Wallace Company produces two products from a common input. Data relating to the two products are given below:

Product A Product B
Sales value at the split off point.... $60,000 $120,000
Allocated joint product costs... $45,000 $90,000
Sales value after further processing... $90,000 $200,000
Cost of further processing... $20,000 $85,000

Determine which of the products should be sold at the split off point, and which should be processed further before sale. Use the form that appears below.

Product A Product B
Sales value after further processing... $________ $________
Sales value at the split off point... _________ _________
Incremental revenue from further processing... _________ _________
Less cost of further processing... _________ _________
Profit (loss) from further processing... $________ $________

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Product A Product B
Sales value after further processing... 90,000 200,000
Sales value at ...

Solution Summary

The solution explains how to determine whether the products should be sold at split off point or processed further

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