6-A3 Joint Products: Sell or Process Further The Mussina Chemical Company produced three joint products at...

6-A3 Joint Products: Sell or Process Further

The Mussina Chemical Company produced three joint products at a joint cost of $117,000. These products were processed further and sold as follows:

Chemical Product	Sales	Additional Processing Costs
A	$230,000	$190,000
B	$330,000	$300,000
C	$175,000	$100,000

The company has had an opportunity to sell at split-off directly to other processors. If that alternative had been selected, sales would have been A, $54,000; B, $32,000; and C, $54,000.
The company expects to operate at the same level of production and sales in the forthcoming year.

1. Could the company increase operating income by altering its processing decisions? If so, what would be the expected overall operating income?
2. Which products should be processed further and which should be sold at split-off?

Solutions

Expert Solution

Above question is about a product whether it should be further processed or sold at split off value. Refer below images for more detailed solution.

ekkarill92 answered 10 months ago

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