Answer:
MARIN PRODUCTS
Selling after further processing
DBB-1 DBB-2 DBB-3
unit 16,000 24,000 36,000
Sales revenue after
processing $1,040,000 $1,200,000 $2,700,000
Joint Cost (757,895) (1,136,842) (1,705,263)
Separate processing cost <u>(110,000) </u> <u>(44,000) </u> <u> (66,000)</u>
Net Income <u> 172,105 </u> <u> 10,158 </u> <u> 928,737</u>
selling at slipt off point
DBB-1 DBB-2 DBB-3
unit 16,000 24,000 36,000
Sales revenue $400,000 840,000 1,980,000
Joint Cost <u> (757,895) </u> <u> (1,136,842) </u> <u>(1,705,263)</u>
Net Income <u> (357,895) </u> <u> (296,842) </u> <u> 274,737</u>
Decision : All products should be processed further in order to increase the profit of the company
Allocation of Joint Cost
Cost per unit = $3,600,000/76,000= $47.37
DBB-1 = $47.37*16,000 = $757,895
DBB-2 = $47.37*24,000 = $1,136,842
DBB-3 = $47.37*36,000 = $1,705,263
Explanation:
