Chen Minerals processes materials extracted from
mines. The most common raw material that it processes results in three joint
products: Larco, Marco, and Narco.
E7-11 Chen
Minerals processes materials extracted from mines. The most common raw material
that it processes results in three joint products: Larco, Marco, and Narco.
Each of these products can be sold as is, or it can be processed further and
sold for a higher price. The company incurs joint costs of $180,000 to process
one batch of the raw material that produces the three joint products. The
following cost and sales information is available for one batch of each
product.
|
Sales
Value at
Split-off Point |
Allocated
Joint Costs
|
Cost
to Further Process
|
Sales
Value of Processed Product
|
|
|
Larco
|
$200,000
|
$40,000
|
$110,000
|
$300,000
|
|
Marco
|
300,000
|
60,000
|
85,000
|
400,000
|
|
Narco
|
405,000
|
80,000
|
250,000
|
800,000
|
Instructions
Determine whether each of the three joint products
should be sold as is, or processed further.
TUTORIAL
PREVIEW
Determine whether each of the three joint products
should be sold as is, or processed further.
|
To determine whether
each of the three joint products should be sold as is, or processed further,
we must determine the incremental profit or loss that would
|
File name: E7-11 Chen Minerals.xls File type: .xls PRICE: $4
