Problem:
1. Products A and B are produced jointly in Department Z. Each product can be sold as is at the split-off point or processed further. During January, Department Z recorded a joint cost of $150,000. The following data for January are available:
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Selling Prices per Unit
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Costs after
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Product
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Quantity
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At Split-Off
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-If Processed Further
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Split-Off
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A
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10,000 units
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$5
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$8
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$40,000
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|
B
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20,000
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1SO
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2
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5,000
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Analyze whether individual products should be processed beyond the split-off point, using:
(a) The total project approach (or comparative statement approach)
(b) The incremental (differential) approach
(c) The opportunity cost approach