Arcadia,Inc ADetermine Which Products Should Be Processed Further

question 85

Essay

Arcadia,Inc.,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:
$\begin{array}{cccc}&&&\text { Sales Value of Final }\\\underline{\text { Product}}&\underline{\text { Sales Value at Split-off }}&\underline{\text { Additional Processing Costs }}& \underline{\text { Product }}\\\mathrm{W} & \$ 40,000 & \$ 24,000 & \$ 70,000 \\\mathrm{X} & 16,000 & 10,000 & 20,000 \\\mathrm{Y} & 20,000 & 10,000 & 48,000 \\\mathrm{Z} & \underline{2 4 , 0 0 0} & \underline{16,000} & \underline{36,000} \\&\underline{\$100,000} & \underline{\$ 60,000} &\underline{ \$ 174,000}\end{array}$
a.Determine which products should be processed further.
b.How will processing each product further affect profits?

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Definitions:

General Ledger

A comprehensive record of all financial transactions that occur within a company, serving as the primary data source for the financial statements.

Financial Statements

Structured reports that detail the financial activities and conditions of a business, including balance sheet, income statement, and cash flow statement.

Balance Sheet Accounts

Accounts displayed on the balance sheet that represent the company's assets, liabilities, and ownership equity at a specific point in time.

Posting

The process of transferring journal entries to the ledger accounts in accounting.