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What guideline should be used in determining whether a joint product should be sold at the split-off point or processed further?
Hoanglan182
- 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:
Product Quantity Selling price per unit Costs after Split-off
At split-off If processed further
A 10,000 Units $ 5 $ 8 60,000
B 20,000 1.50 2 20,000
Analyze whether individual products should be processed beyond the split-off point, using: ( That means support your answer with the following format of calculations):
(a) The total project approach
(b) The incremental approach
(c) The opportunity cost approach
Zinaye Abayneh
Wiki User
∙ 12y agoIt would be profitable to continue processing a joint product after the split-off point as long as the incremental revenue from such processing exceeds the incremental processing cost incurred after the split-off point.
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