Question

WP Corporation produces products X, Y, and Z from a single raw material input in a joint production process. Budgeted data for the next month is as follows: Product XProduct YProduct ZUnits produced 1,400 1,900 2,900Per unit sales value at split-off$12.00$17.00$14.00Added processing costs per unit$3.00$5.00$5.00Per unit sales value if processed further$18.00$18.00$23.00 The cost of the joint raw material input is $67,000. Which of the products should be processed beyond the split-off point

Answer 1

Product X and Z can be further processed

Step-by-step explanation:

Financial advantage (disadvantage) to determine which product to be sold at split off and which is to be further processed - WP Corporation

Particulars Product X Product Y Product Z

Selling price after $18.00 $18.00 $23.00

further processing

Selling price at split $12.00 $17.00 $14.00

off point

Increment revenue $6.00 $1.00 $9.00

per pound or gallon

Total quarterly output 1400 1900 2900

in pound or gallon

Total Incremental $8,400.00 $1,900.00 $26,100.00

revenue

Total incremental $4,200.00 $9,500.00 $14,500.00

processing cost

Financial advantage $4,200.00 -$7,600.00 $11,600.00

(disadvantage) of further

processing

Process Further? Yes No Yes

Therefore product X and Z can be further processed