Question

BenjaminCompanyproducesproductsC,J,andRfromajointproductionprocess.Eachproductmaybesold at the split-off point or processed further. Joint production costs of $95,000 per year are allocated to the productsbasedontherelativenumberofunitsproduced.DataforBenjamin'soperationsforlastyearfollow:

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Answer 1

Product C and J only should processed further.

Step-by-step explanation:

A project from a joint process should be processed further if additional sales revenue from further processing exceeds further processing cost.

So we will compare the net income i.e additional sales revenue minus sales further processing cost less for the three products as follows:

Net income

Product C : (100,000-75,000)-20,000 = $5,000

Product J: (115,000-70,000)-36,000= $9,000

Product R: (55,000-46,500) - 10,000=$(1,500)

Product C and J only should processed further.