Figure 6-8
James Ltd $\begin{array}{lr}\text { Direct materials } & £ 50,000 \\\text { Direct labour } & 20,000 \\\text { Overhead } & 40,000\end{array}$

question 50

Multiple Choice

Figure 6-8
James Ltd. produces three products in a joint process: A, B, and C. The joint costs are as follows: $\begin{array}{lr}\text { Direct materials } & £ 50,000 \\\text { Direct labour } & 20,000 \\\text { Overhead } & 40,000\end{array}$ The split-off values for A, B, and C are £80,000, £100,000, and £60,000, respectively. If management processes the three products beyond the split-off point, sales values for A, B, and C would increase to £150,000, £130,000, and £120,000, respectively. In order to process the products further, the company must incur separable costs of £14,000, £12,000, and £10,000 for products A, B, and C, respectively. James uses the sales-value-at-split-off method to allocate joint costs.
-Refer to Figure 6-8. Should James Ltd. process B further?

• A)Process further; profits will increase £30,000.
• B)Process further; profits will increase £98,000.
• C)Process further; profits will increase £18,000.
• D)Sell now.

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Definitions:

Staples

Metal wires bent to form a U shape, used to bind sheets of paper together or to attach materials to surfaces.

Sebaceous Cyst Removal

The surgical procedure to remove a sebaceous cyst, which is a closed sac under the skin filled with a cheese-like or oily material.

Sebum

Oily secretion of the sebaceous glands of the skin.

Excision

The surgical removal of a body tissue, organ, or other entity either completely or partially.