Solex Company manufactures three products from a common input in a joint processing operation. Joint processing...

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Accounting

Solex Company manufactures three products from a common input ina joint processing operation. Joint processing costs up to thesplit-off point total $100,000 per year. The company allocatesthese costs to the joint products on the basis of their total salesvalue at the split-off point. These sales values are as follows:product X, $51,000; product Y, $92,000; and product Z, $60,000.

     Each product may be sold at thesplit-off point or processed further. Additional processingrequires no special facilities. The additional processing costs andthe sales value after further processing for each product (on anannual basis) are shown below:

ProductAdditional
Processing Costs
Sales Value after
Further Processing
X$35,000      $79,000          
Y$39,000      $154,000          
Z$11,000      $80,000          
Required:
a.

Compute the incremental profit (loss) for each product.(Loss amounts should be indicated with a minus sign. Omitthe "$" sign in your response.)

       Product X       Product Y       Product Z
  Incremental profit (loss)$   $   $   
b.

Which product or products should be sold at the split-off point?(You may select more than one answer.Single click the box with the question mark to produce a check markfor a correct answer and double click the box with the questionmark to empty the box for a wronganswer.)

  • Product Xunanswered
  • Product Yunanswered
  • Product Zunanswered
c.

Which product or products should be processed further?(You may select more than one answer.Single click the box with the question mark to produce a check markfor a correct answer and double click the box with the questionmark to empty the box for a wronganswer.)

Answer & Explanation Solved by verified expert
3.7 Ratings (326 Votes)
ALLOCATION OF COST AT SPLIT OFF POINT on the basis of sales value Total joint cost 100000 Sales value at split off point Product X 51000 Product Y 92000 Product Z 60000 Total sales value 203000 Cost allocated to    See Answer
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