Lamar Corporation has a joint process, which produces three products called A, B and C. Each product may be sold at split-off or processed further and then sold. Joint processing costs for a year are $10,000. Other relevant data are:
Sales Value Separable Processing Sales Value
Product at Split-Off Costs After Split-Off at Completion
A $94,000 $28,000 $116,000
B 60,000 8,000 82,000
C 66,000 14,000 80,000
Required:
A) Which products should be processed further? Why?
B) If the Lamar Company maximizes profits, what is the operating income?