Case Scenario:
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:
|
Product
|
Units
Produced
|
Sales values at
split-off
|
Additional sales values and costs if
processed further
|
|
Sales values
|
Added costs*
|
|
C
|
6,000
|
$75,000
|
$100,000
|
$20,000
|
|
J
|
9,000
|
$70,000
|
$115,000
|
$36,000
|
|
R
|
4,000
|
$46,500
|
$55,000
|
$10,000
|
*All variable and traceable to the products involved.
Required: Which products should be processed beyond the split-off point?