Explore BrainMass
Share

# Joint Processing and Split Off Points

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Problem is below. I've come to a conclusion that product J would bring in sales of \$636,000 and product K would bring in sales of \$1,350,000 which would make me think to sell J at split and continue to process K. What is correct answer?

28. India Corporation has \$200,000 of joint processing costs and is studying whether to process J and K beyond the split-off point. Information about J and K follows.

Tons produced: J = 25,000; K = 15,000
Separable variable processing costs beyond split off: J = \$64,000; K = \$100,000
Selling price per ton at split off: J = \$15; K = \$52
Selling price per ton after additional processing: J = \$21; K = \$58

If India desires to maximize total company income, what should the firm do with regard to Products J and K?

A. Sell product J at split off and Sell product K at split off
B. Sell product J at split off and process product K beyond split off
C. Process product J beyond split off and Sell Product K at split off
D. Process product J beyond split off and Process product K beyond split off
E. There is not enough information to judge.

A) Entry A
B) Entry B
C) Entry C
D) Entry D
E) Entry E

#### Solution Preview

Thank you for using BM.

ANSWER: C. Process product J beyond split off and Sell ...

#### Solution Summary

Joint Processing and Split Off Points are assessed.

\$2.19

## Split-off point & pay back period

Use the following to answer question 89:
Dowchow Company makes two products from a common input. Joint processing costs up to the split-off point total \$38,400 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below:

Product X Product Y Total
Allocated joint processing costs \$20,800 \$17,600 \$38,400
Sales value at split-off point \$26,000 \$22,000 \$48,000
Costs of further processing \$22,600 \$20,400 \$43,000
Sales value after further processing \$45,000 \$45,900 \$90,900

89. What is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point?
A) \$1,600 C) \$27,600
B) \$22,400 D) (\$3,600)

91. (Ignore income taxes in this problem.) A company with \$800,000 in operating assets is considering the purchase of a machine that costs \$75,000 and which is expected to reduce operating costs by \$20,000 each year. The pay back period for this machine in years is closest to:
A) 0.27 years. C) 3.75 years.
B) 10.7 years. D) 40 years.

View Full Posting Details