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Determine whether to sell or process further

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E6-7 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, or it can be processed further and sold for a
higher price. The company incurs joint costs of $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 Costs 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

Instructions

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

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E6-7 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, or it can be processed further and sold for a
higher price. The company incurs joint costs of $180,000 to process one batch of the raw
material that produces the three joint ...

Solution Summary

The solution explains how to decide whether to sell or process further

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