Question

Two products, QI and VH, emerge from a joint process. Product QI has been allocated $35,300 of the total joint costs of $56,000. A total of 3,000 units of product QI are produced from the joint process. Product QI can be sold at the split-off point for $12 per unit, or it can be processed further for an additional total cost of $11,000 and then sold for $14 per unit. If product QI is processed further and sold, what would be the financial advantage (disadvantage) for the company compared with sale in its unprocessed form directly after the split-off point?a.$44,300)b.$(5,000)c.$31,000d.($30,300)

Answer 1

b.$(5,000)

Step-by-step explanation:

QI and VH

Sales value after further processing ($14 × 3,000) $42,000

Costs of further processing $11,000

Benefit of further processing

($42,000-$11,000) $31,000

Less: Sales value at split-off point ($12 × 3,000) $36,000

Net advantage (disadvantage) ($5,000)

Therefore If product QI is processed further and sold, what would be the financial advantage (disadvantage) for the company compared with sale in its unprocessed form directly after the split-off point is $(5,000)