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:

Hemangioma

A benign tumor made up of blood vessels, often appearing as a red or purple birthmark.

Myocarditis

An inflammation of the heart muscle (myocardium), often caused by viral infections, that can lead to heart dysfunction.

Heart Muscle

Also known as myocardium, this is the muscular tissue of the heart responsible for its pumping action.

Inflammation

The body's response to injury, irritation, or infection, characterized by redness, warmth, swelling, and pain in the affected area.