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Ronch [10]
3 years ago
11

Qu. 13-95 (Algo) Two products, QI and VH, emerge from a joint process... Two products, QI and VH, emerge from a joint process. P

roduct QI has been allocated $27,300 of the total joint costs of $48,000. A total of 2,200 units of product QI are produced from the joint process. Product QI can be sold at the split-off point for $11 per unit, or it can be processed further for an additional total cost of $10,200 and then sold for $13 per unit. If product QI is processed further and sold, what would be the financial advantage (disadvantage) for the company compared with sale in its unprocessed form directly after the split-off point
Business
1 answer:
Andrews [41]3 years ago
7 0

Answer and Explanation:

The computation of the financial advantage or disadvantage is as follows:

<u>Particulars                                              Product Q1 </u>

Selling price after further processing  13.00

Selling price at split off point                 11.00

Incremental revenue per pound or gallon 2.00

Total production                                    2,200.00

Total Incremental Revenue                 4,400.00

Total Incremental Processing costs        10,200.00

Total Incremental profit or loss                   (5,800.00)

Since there is an incremental loss so the same would be Sold at split off

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A

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This implies that Cosmo is more realistic in terms of his financial abilities and willingness to work toward the goal of paying off the mortgage loan

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