Reed Company produced three joint products at a joint cost of P100,000. These products were...
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Accounting
Reed Company produced three joint products at a joint cost of P100,000. These products were processed further and sold as follows:
Product Sales Additional Processing Costs
A P245,000 P200,000
B 330,000 300,000
C 175,000 100,000
The company has had an opportunity to sell at split-off directly to other processors. If that alternative had been selected, sales would have been: A, P56,000; B, P28,000; and C, P56,000. The company expects to operate at the same level of production and sales in the forthcoming year. Consider all the available information and assume that all costs incurred after split-off are variable.
- Which products should be processed further and which should be sold at split-off? Explain and show your supporting solution.
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