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Sales Value at
Sales Value of
Split-Off Point
Allocated Joint Costs
Cost to Process Further
Processed
Product
Spock
$300,000 $210,000 $40,000 $110,000
Uhura
400,000 300,000 60,000 85,000
80,000 250,000
Sulu
800,000
455,000
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
industrial-cleaner 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