3) Harrison Company manufactures three products from a common input in a joint processing operation. Joint
processing costs up to the split-off point total $100,000 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:
product X, $50,000; product Y, $90,000; and product Z, $60,000.
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:
Product
Additional Processing Costs
Sales Value after Further Processing
X
$35,000
$80,000
Y
$40,000
$150,000
Z
$12,000
$75,000
Which product or products should be sold at the split-off point, and which product or products should be
processed further? Show and label your computations. Be sure to use words and numbers. Your final
answers should also include the increase/(loss) associated with each product.
