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. $27 000 decrease
b. $21 000 increase
c. $25 000 increase
d. $5000 increase
Solutions
Expert Solution
Solution:
d. $5,000 Increase
| Particulars | Product A |
| Sales form further processing (5000 x 25) | 125000 |
| Less: sales revenue if sold (5000 x 20) | 100000 |
| Incremental revenue from further processing (125000 - 100000) | 25000 |
| Less: Cost of futher processing | 20,000 |
| Increase(decrease) in profit (25000 - 20000) | 5,000 |
ekkarill92 answered 2 years 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...
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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
$
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$
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
$
25
$
12
$...
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split-off
Disposal
cost per yard at
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Further
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per yard
Final sale
price per
yard
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Z 2,200 9.00 5.00 3.00 11.25
If X and Z are processed further, no disposal costs will be
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per lb. at
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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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could continue on with additional processing and be sold as a more
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The total joint manufacturing costs were 100,000$. Information
regarding the products appears below:
Product A
Product B
Product C
Units Produced
20,000
25,000
10,000
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$150,000
$50,000
$20,000
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$30,000
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