Park Company Produces Three Products in a Joint Process: A

question 15

Essay

Park Company produces three products in a joint process: A, B, and C. The joint costs are described as follows: The split-off values for A, B, and C are £100,000, £120,000 and £80,000, respectively. If management processes A beyond the split-off point, the sales value of A would increase to £150,000. In order to process A further, the company must rent another facility for £24,000, as well as incur additional materials and labour costs equal to £15,000.
Required:
a.
What is the amount of joint costs allocated to products A, B, and C if the sales value at split-off value method is used?
b.
Should the division process A further or sell it at split-off? What is the effect of the decision on gross profit?

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Definitions:

Malnutrition

A condition resulting from an insufficient, excessive, or imbalanced intake of nutrients.

Vector

An agent, such as an insect or rodent, that carries and transmits a disease-causing organism from one host to another.

Disease Transmission

The mechanism by which a disease spreads from one individual to another, either through direct contact, vectors, or environmental factors.

Parasitic Organism

An organism that lives on or within a host species, deriving nutrients at the host's expense, often causing harm but occasionally living in an otherwise harmless relationship.