McDavid Co. produces products R, J and C from a joint production process. Each product...
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Accounting
McDavid Co. produces products R, J and C from a joint production process. Each product may be sold at the split-off point or be processed further. Joint production costs of $92,000 per year are allocated to the products based on the relative number of units produced. Data for McDavids operations for the current year are as follows:
Product
Units Produced
Allocated Joint Production Cost
Sales Value at Split-off
R
8,000
$32,000
$76,000
J
10,000
40,000
71,000
C
5,000
20,000
48,000
Products R, J and C can be processed beyond the split-off point for additional costs of $26,000, $38,000 and $12,000 respectively and can then be sold for $105,000, $117,000 and $57,000 respectively.
Required:
Which products should be processed beyond the split off point? Show calculations.
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