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... $________ $________