Triple Corporation Has a Joint Process That Produces Two Products

question 30

Multiple Choice

Triple Corporation has a joint process that produces two products: A and B.Each product may be sold at the split-off point or processed further and then sold.Joint-processing costs for a year are $25,000. Product A can be sold at the split-off point for $32,000.Alternatively,Product A can be processed further and sold for $40,000.Additional processing costs are $5,000.
When deciding whether to sell Product A at the split-off point or to process further,the ________ is NOT relevant.

• A)joint processing cost of $25,000
• B)sales value at split-off of $32,000
• C)sales value at completion of $40,000
• D)additional processing cost of $5,000

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Definitions:

Fair Market Value

The price at which an asset would trade in a competitive auction setting.

Sam, Capital

An account representing the owner's (Sam's) equity or ownership interest in a business.

Profit and Loss Ratio

An indicator that measures the ratio of profits earned to losses incurred over a particular period, often used to assess a company's financial health.

Income Summary

A temporary account in the ledger that summarizes revenue and expenses and transfers the balance (net income or net loss) to Capital. This account does not have a normal balance, i.e. it could have a debit or a credit balance.