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

question 99

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:
$\begin{array}{|l|r|r|r|}\hline \text { Product } & \begin{array}{r}\text { Sales Value } \\\text { at Split-Off }\end{array} & \begin{array}{r}\text { Further } \\\text { Processing Cost }\end{array} & \begin{array}{r}\text { Sales Value after Further } \\\text { Processing }\end{array} \\\hline \mathrm{T} & \$ 180,00 \mathrm{~d} & \$ 60,000 & \$ 230,000 \\\hline \mathrm{K} & \$ 135,000 & \$ 105,000 & \$ 280,000 \\\hline \mathrm{L} & \$ 95,000 & \$ 85,000 & \$ 160,000 \\\hline\end{array}$
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:

Hedge

An investment position intended to offset potential losses or gains that may be incurred by a companion investment, commonly used for risk management.

Exchange Variations

Refers to the fluctuations in the value of currencies in the foreign exchange market, impacting the value of foreign currency transactions.

Foreign Currency

Foreign Currency is the currency of another country, which is required for conducting international transactions or investments.

Annual Repayments

are fixed amounts paid back by a borrower to a lender at regular intervals over a year to reduce or settle a loan's principal and interest.