Question - Processing beyond split-off
Washington Cannery makes three products from a single joint process. For 2010, the cannery processed all three products beyond split-off. The following data were generated for the year:
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Joint Product Incremental Separate Cost Total Revenue
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Candied apples $26,000 $680,000
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Apple jelly 38,000 765,000
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Apple jam 15,000 289,000
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Analysis of 2010 market data reveals that candied apples, apple jelly, and apple jam could have been sold at split-off for $670,000, $730,000, and $260,000, respectively.
a. Based on hindsight, evaluate management's production decisions in 2010.
b. How much additional profit could the company have generated in 2010 if it had made optimal decisions at split-off?