2. ABC Company uses a joint process to produce products A, B, and C. The joint production costs for 201A were 500,000 and were allocated using relative sales value at the split-off point method. Each product may be sold at its split-off point or processed further. Additional processing costs are entirely variable. Products Sales Value at Split-off Additional Processing Costs Final Sales Value A P300,000 P130,000 420,000 B 120,000 100,000 230,000 C 250,000 140,000 400,000
2. ABC Company uses a joint process to produce products A, B, and C. The joint production costs for 201A
were 500,000 and were allocated using relative sales value at the split-off point method.
Each product may be sold at its split-off point or processed further. Additional
variable.
Products
Sales Value at
Split-off
Additional
Processing
Costs
Final Sales
Value
A P300,000 P130,000 420,000
B 120,000 100,000 230,000
C 250,000 140,000 400,000
P670,000 P370,000 P1,050,000
a. To maximize profit, which product/s should be sold at split-off point and be processed further,
respectively?
b. If the alternative were to sell at split-off point or to process further all products, which alternative
would be recommended?
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