In a joint processing operation, Nolen Company manufactures three grades of sugar from a common input, sugar cane. Joint processing costs up to the split-off point total $40,200 per year. The company allocates these costs to the joint products on the basis of their total sales value at the split-off point. These sales values are as follows: raw sugar, $21,400; brown sugar, $21,400; and white sugar, $24,100.
Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities. The additional processing costs and the sales value after further processing for each product (on an annual basis) are shown below:
ProductAdditional Processing Costs and Sales value
ValueRaw sugar$20,900 ;$40,800 ;Brown sugar$12,400; $35,700 ;White sugar$6,300; $44,800 .
Required:
a. Compute the Incremental profit (loss) for each product. (Loss amounts should be indicated by a minus sign.)
Raw SugarBrown SugarWhite SugarIncremental profit (loss)
b. Which product or products should be sold at the split-off point? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)
check all that apply 1
Raw sugarunanswered
Brown sugarunanswered
White sugarunanswered
c. Which product or products should be processed further? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)
check all that apply 2
Raw sugarunanswered
Brown sugarunanswered
White sugar