Bowen Company Produces Products P, Q, and R from a Joint

question 245

Essay

Bowen Company produces products P, Q, and R from a joint production process. Each product may be sold at the split-off point or be processed further. Joint production costs of $81,000 per year are allocated to the products based on the relative number of units produced. Data for Bowen's operations for the current year are as follows:
Product P can be processed beyond the split-off point for an additional cost of $10,000 and can then be sold for $50,000. Product Q can be processed beyond the split-off point for an additional cost of $35,000 and can then be sold for $65,000. Product R can be processed beyond the split-off point for an additional cost of $6,000 and can then be sold for $25,000.Required:Which products should be processed beyond the split-off point?

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Definitions:

Rotational Slide

A slide in which shearing takes place on a well-defined, curved shear surface, concave upward, producing a backward rotation in the displaced mass; synonymous with slump.

Debris Flow

A rapid movement of water-saturated rock, soil, and organic matter down slopes, capable of transporting large items due to its dense nature.

Cascade Mountains

A major mountain range extending from southern British Columbia through Washington and Oregon to Northern California, known for its scenic beauty and volcanic peaks.

Volcanic Ash

Fine particles of rock and volcanic glass created during explosive volcanic eruptions, capable of being carried long distances by wind.