Question

Cellestial Manufacturing Company produces Products A1, B2, C3, and D4 through a joint process. The joint costs amount to $200,000. If Processed Further Sales Value Additional Product Units Produced at Split-Off Costs Sales Value A1 3,000 $10,000 $2,500 $15,000 B2 5,000 30,000 3,000 35,000 C3 4,000 20,000 4,000 25,000 D4 6,000 40,000 6,000 45,000 If Product B2 is processed further, profits will

Answer 1

Answer:

$2,000

Explanation:

The computation of the profit in case of Product B processed further is shown below:

Sales value if processed further $35,000  

Less: Sales value at Split-Off $30,000  

Incremental revenue                 $5,000  

Less: Additional costs                 $3,000  

Incremental income                 $2,000  

First we have to find out the incremental revenue after that deduct the additional cost so that the incremental income or we can say profit could arrive