Benjamin Signal Company Produces Products R,J,and C from a Joint

question 120

Essay

Benjamin Signal Company produces products R,J,and C from a joint production process.Each product may be sold at the split-off point or be processed further.Joint production costs of $92,000 per year are allocated to the products based on the relative number of units produced.Data for Benjamin's operations for the current year are as follows:
$\begin{array}{|l|r|r|r|}\hline & \text { Units } & \text { Allocated Joint } & \text { Sales Value } \\\hline \text { Product } & \text { Produced } & \text { Production Cost } & \text { At Split-off } \\\hline \text { R } & 8,000 & \$ 32,000 & \$ 76,000 \\\hline \mathrm{T} & 10,000 & 40,000 & 71,000 \\\hline \text { C } & 5,000 & 20,000 & 48,000 \\\hline\end{array}$
Product R can be processed beyond the split-off point for an additional cost of $26,000 and can then be sold for $105,000.Product J can be processed beyond the split-off point for an additional cost of $38,000 and can then be sold for $117,000.Product C can be processed beyond the split-off point for an additional cost of $12,000 and can then be sold for $57,000.
Required:
Which products should be processed beyond the split-off point?
$\begin{array}{|l|r|r|r|}\hline& \mathrm{R} & \mathrm{J} & \mathrm{C} \\\hline \text { Sales value after further processing } & \$ 105,000 & \$ 117,000 & \$ 57,000 \\\hline \text { Sales value at split-off } & \underline{76,000 \mathrm{U}} & \underline{71,000} & \underline{48,000} \\\hline \text { Added sales value from processing } & \$ 29,000 & \$ 46,000 & \$ 9,000 \\\hline \text { Added processing costs } & 26,000 & 38,000 & \underline{12,000} \\\hline \text { Net gain (loss) from further processing } & \$ 3,000 & \$ 8,0000 & \$(3,000) \\\hline\end{array}$

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