Managerial Accounting: E7-11 Chen Minerals processes materials extracted from mines

Managerial Accounting
Exercise 7-11
Chen Minerals processes materials extracted from mines. The most common raw material that it processes results in three joint products: Larco, Marco, and Narco. 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 $178,660 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 Split-off Point Allocated Joint Costs Cost to Process Further Sales Value of Processed Product
Larco 200,000 40,000 110,000 300,000
Marco 300,000 60,000 85,000 400,000
Narco 405,000 80,000 250,000 800,000

Instructions:
a. Determine the incremental profit or loss that each of the three joint products. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).
b. Indicate whether each of the three joint products should be sold as is, or processed further.
Powered by