Problem:
Products Kappa and Sigma are joint products. The joint production cost of the products is $800. Kappa has a market value of $450 at the split-off point. If Kappa is further processed at an additional cost of $600, its market value is $1,400. Product Sigma has a market value of $1,150 at the split-off point. If Product Sigma is further processed at an additional cost of $300, its market value is $1,400.
Required:
Question 1) Using the relative sales value method, calculate the joint product cost that would be allocated to Kappa and Sigma.
Question 1) How do you know if one of the products should be further processed? Provide thorough explanation of the given question.