b. If Riggs suddenly finds an opportunity to rent out the unused capacity of its factory for $ 77,000 per year, would your answer to part( a) change? Briefly explain.
E7-11
Kirk 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 $ 180,000 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
Sales Value of
Split-Off Point Process Further Processed
Allocated Joint Costs Cost to
Product
Spock |
$ 210,000 |
$ 40,000 |
$ 110,000 |
$ 300,000 |
|
|
|
Uhura |
300,000 |
60,000 |
85,000 |
400,000 |
|
|
|
Sulu |
455,000 |
80,000 |
250,000 |
800,000 |
|
|
|
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