Benjamin Company produces products C, J, and R from a joint production process. Each product may be sold at the split-off point or processed further. Joint production costs of $95,000 per year are allocated to the products based on the relative number of units produced. Data for Benjamin's operations for last year follow:??Units ProducedSales Values at Split-OffSales Values If Processed FurtherCosts of Processing Further?Product C6,000$75,000$100,000$20,000?Product J9,000$70,000$115,000$36,000?Product R4,000$46,500$55,000$10,000Required:Which products should be processed beyond the split-off point?
What will be an ideal response?
| ? | ? | Product C | Product J | Product R |
| ? | Sales value after further processing | $100,000 | $115,000 | $55,000 |
| ? | Sales value after split-off | 75,000 | 70,000 | 46,500 |
| ? | Added sales value from processing | 25,000 | 45,000 | 8,500 |
| ? | Added processing costs | 20,000 | 36,000 | 10,000 |
| ? | Financial advantage (disadvantage) from further processing | $5,000 | $9,000 | $(1,500) |
Products C and J should be processed beyond the split-off point. Product R should be sold at split-off. Joint production costs are not relevant to the decision to sell at split-off or to process further.
Business
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