Question
In: Accounting
Lido Products produces two products (A and B) from a joint process. The joint cost of...
Lido Products produces two products (A and B) from a joint process. The joint cost of production is $80 000. Five thousand units of Product A can be sold at split-off for $20 per unit or processed further at an additional cost of $20 000 and sold for $25 per unit. Ten thousand units of Product B can be sold at split-off for $15 per unit or processed further at an additional cost of $20 000 and sold for $16 per unit. What is the difference in profit if Lido decides to process further Product A, instead of selling it at split-off? Select one: a. $25 000 increase b. $5000 increase c. $27 000 decrease d. $21 000 increase
Solutions
Expert Solution
Solution:
Difference in profit if Lido decides to process further Product A, instead of selling it at split-off = Sale value after further processing - Sale value at split off point - Further processing costs
= (5000*$25) - (5000*$20) - $20,000 = $5,000 Increase
Hence option b is correct.
ekkarill92 answered 1 year agoRelated Solutions
Lido Products produces two products (A and B) from a joint process. The joint cost of...
Lido Products produces two products (A and B) from a joint
process. The joint cost of production is $80 000. Five thousand
units of Product A can be sold at split-off for $20 per unit or
processed further at an additional cost of $20 000 and sold for $25
per unit. Ten thousand units of Product B can be sold at split-off
for $15 per unit or processed further at an additional cost of $20
000 and sold for $16...
TMCC Inc. produces joint products A, B, and C from a joint process. Information concerning a...
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A
B
C
Total
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2,500
4,000
1,500
8,000
Price (after addt'l processing)
$
35
$
22
$
15
Separable Processing cost
$
35,000
$
12,000
$
16,000
$
63,000
Units Produced
2,500
4,000
1,500
8,000
Total Joint Cost
$
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Sales Price at Split-off
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25
$
12
$...
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Disposal
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Further
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Final sale
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If X and Z are processed further, no disposal costs will be
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Pounds
Sales price
per lb. at
split-off
Disposal
cost per
lb. at
split-off
Further
processing
per pound
Final
sales price
per pound
A
800
$6.50
$3.00
$2.00
$ 7.50
B
1,100
8.25
4.20
3.00
10.00
C
1,500
8.00
4.00
3.50
10.50
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Product A
Product B
Product C
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20,000
25,000
10,000
Sales Value at Split-off
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$50,000
$20,000
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$10,000
$30,000
$5,000
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$90,000
$28,000
Required:
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16,000
120,000
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30,000
8
5,000
250,000
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