Split-Off Point Allocated Joint Costs Cost to Process Further Processed
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 |
|
|
|
Instructions
a. Determine whether each of the three joint products should be sold as is, or processed further.
P7-3A
Thompson Industrial Products Inc.( TIPI) is a diversified industrialcleaner processing company. The company ' s Dargan plant produces two products: a table cleaner and a floor cleaner from a common set of chemical inputs( CDG). Each week, 900,000 ounces of chemical input are processed at a cost of $ 210,000 into 600,000 ounces of floor cleaner and 300,000 ounces of table cleaner. The floor cleaner has no market value until it is converted into a polish with the trade name Floor Shine. The additional processing costs for this conversion amount to $ 240,000.
Floor Shine sells at $ 20 per 30-ounce bottle. The table cleaner can be sold for $ 17 per 25-ounce bottle. However, the table cleaner can be converted into two other products by adding 300,000 ounces of another compound( TCP) to the 300,000 ounces of table cleaner. This joint process will yield 300,000 ounces each of table stain remover( TSR) and table polish( TP). The additional processing costs for this