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Product    Number of Units Produced    Selling Price at Split-Off    Selling Price After Processing    Additional Processing Costs    tables 4500 $11.00 $15.50 $11,000 benches 6000 $14.00 $16.20 $16,500 planters 1500 $18.50 $26.00 $8,000 Superior Company manufactures three...

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Question

Accounting

Product   Number of Units Produced   Selling Price at Split-Off   Selling Price After Processing   Additional Processing Costs   
tables4500$11.00$15.50$11,000
benches6000$14.00$16.20$16,500
planters1500$18.50$26.00$8,000

Superior Company manufactures three products using the sameproduction process: tables, benches, and planters. The costsincurred up to the split-off point are $250,000. These costs areallocated to the products on the basis of their sales value at thesplit-off point. The number of units produced, the selling pricesper units at each point in production, and the additionalprocessing costs are as follows:

1) Which information is not relevant to the decision on whetheror not to process the products further (1 pt)?

2) Prepare an incremental analysis (with labels!) of the threeproducts (6 pts).

3) Which products should be processed further and which shouldbe sold at the split-off point (2 pts)?

4) Would your decision in #3 be different if the company wasusing quantity of output to allocate joint costs? Explain (1pt).

Answer & Explanation Solved by verified expert
4.1 Ratings (460 Votes)
a The costs that are relevant in this decision are the incremental revenues and the incremental costs associated with processing the material past the splitoff point    See Answer
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