Harris Corp The "Further Processing Costs" Consist of Variable and Avoidable Fixed

question 12

Essay

Harris Corp.manufactures three products from a common input in a joint processing operation.Joint processing costs up to the split-off point total $200,000 per year.The company allocates these costs to the joint products on the basis of their total sales value at the split-off point.Each product may be sold at the split-off point or processed further.The additional processing costs and sales value after further processing for each product (on an annual basis)are:

$\begin{array}{llll}&&& \text { Sales Value } \\&\text {Sales Value}&\text {Further}&\text {After Further}\\\text { Product }& \text { at Split-Off}& \text { Processine Costs}& \text { Processing}\\J & \$ 180,000 & \$ 60,000 & \$ 230,000 \\\mathrm{~K} & \$ 135,000 & \$ 105,000 & \$ 280,000 \\\mathrm{~L} & \$ 95,000 & \$ 85,000 & \$ 160,000\end{array}$

The "Further Processing Costs" consist of variable and avoidable fixed costs.

Required:

Which product or products should be sold at the split-off point, and which product or products should be processed further? Show computations.

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Definitions:

Spreadsheet

A digital document that uses rows and columns to organize data, calculations, and information, commonly used in accounting and financial analysis.

Multiplier

A factor used in economics to quantify the effect of investment spending on the aggregate income or output of an economy.

Full Retirement Age

Age at which a person receives full retirement Social Security benefits.

IRA

An Individual Retirement Account, a saving tool that allows individuals to set aside money for retirement with tax advantages.