Arcadia, SA, Uses a Joint Process to Produce Products W

question 33

Essay

Arcadia, SA, uses a joint process to produce Products W, X, Y, Z. Each product may be sold at its split-off point or processed further. Additional processing costs of specific products are entirely variable. Joint processing costs for a single batch of joint products are £200,000. Other relevant data are as follows: $\begin{array}{ccc}&\text { Sales Value }&\text { Additional }&\text {Sales Value of }\\\text { Product } & \text { at Split-off }& \text { Processing Costs } &\text { Final Froduct }\\W&£ 40,000 & £ 24,000 & £ 70,000 \\X&16,000 & 10,000 & 20,000 \\ Y&20,000 & 10,000 & 48,000 \\ Z&24,000 & 16,000 & 36,000 \\&£ 100,000 &£ 60,000& £174,00 \\\end{array}$
a.Determine which products should be processed further.
b.How will processing each product further affect profits?

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Definitions:

Sigmoid Colon

The part of the large intestine that is closest to the rectum and anus, forming an 'S' shape.

Left Lower Quadrant

A section of the abdomen divided into quadrants for anatomical reference, located on the left side below the umbilicus.

Liver

A vital organ located in the upper-right side of the abdomen, involved in numerous functions including detoxification, protein synthesis, and digestion.

Borborygmi

The rumbling or gurgling noises made by the movement of fluid and gas in the intestines, often associated with hunger or digestive activity.