Nationwide Company manufactures three products from a common input in a joint processing system. Joing processing costs up to the split-off point total $180,000. The company allocates these costs to the joint products on the basis of their total sales value at the split-off point. These sales values are as follows: Product X $125,000, Product Y $175,00, Product Z $120,000.
Each product may be sold at the split-off or processed further. Additional processing requires no special equipment of facilities. The additional annual processing costs and sales value after further processing for each product are shown below:
Additional Processing Costs Sales Value
X $45,000 $180,000
Y 60,000 225,000
Z 25,000 150,000
Which product or products should be sold a the split-off point, and which products should be processed further?
a) Products X and Z should be processed further, but not Product X
b) Products X and Z should be processed further, but not Product Y
c) Products X and Y should be processed further, but not Product Z
d) Products X, Y, and Z should be processed further.