Question

Exercise 23-11 Bramble Minerals processes materials extracted from mines. The most common raw material that it processes results in three joint products: Spock, Uhura, and Sulu. Each of these products can be sold as is, or each can be processed further and sold for a higher price. The company incurs joint costs of $178,600 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 Process Further Sales Value of Processed Product Spock $209,500 $39,200 $110,100 $300,900 Uhura 299,900 59,100 85,100 400,900 Sulu 454,000 80,300 249,500 800,700 Determine the incremental profit or loss that each of the three joint products. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Spock Uhura Sulu Incremental profit (loss) $ $ $ Indicate whether each of the three joint products should be sold as is, or processed further. Spock Uhura Sulu

Answer 1

Answer 1:

	Spock	Uhura	Sulu
Incremental profit (loss)	$(18,700)	$ 41,900	$ 52,200

Answer 2:

Spock	Sale at split-off point
Uhura	Process further
Sulu	Process further

Working Note:

Spock
Process further	Amount	Sale at split off point	Amount
Sales value after processing	$ 300,900	Sales value	$ 209,500
Less: Extra Cost	$ 110,100
Net benefit	$ 190,800	Net benefit	$ 209,500
Difference	$ (18,700)

and,

Uhura
Process further	Amount	Sale at split off point	Amount
Sales value after processing	$ 400,900	Sales value	$ 299,900
Less: Extra Cost	$   59,100
Net benefit	$ 341,800	Net benefit	$ 299,900
Difference	$   41,900

and,

Sulu
Process further	Amount	Sale at split off point	Amount
Sales value after processing	$ 800,700	Sales value	$ 454,000
Less: Extra Cost	$ 294,500
Net benefit	$ 506,200	Net benefit	$ 454,000
Difference	$   52,200

In case of any doubt, please feel free to comment.