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Solex Company

Solex Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $103,000 per year. The company allocates these costs to the joint products on the basis of their total sales value at the split-off point. These sales values are as follows: product X, $58,000; product Y, $93,000; and product Z, $62,000.

Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities. The additional processing costs and the sales value after further processing for each product (on an annual basis) are shown below:

Product Additional
Processing Cost Sales
Value
X $ 45,000 $ 82,000
Y $ 41,000 $ 156,000
Z $ 13,500 $ 78,200

Required:
(a) Compute the incremental profit (loss) for each product. (Negative amount should be indicated by a minus sign.)

Product X Product Y Product Z
Incremental profit (loss) $ $ $

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Solex Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $103,000 per year. The company allocates these costs to the joint products on the basis of their total sales value at the split-off point. These sales values are as follows: product X, $58,000; ...

Solution Summary

This solution is comprised of a detailed explanation to compute the incremental profit (loss) for each product.

$2.19