Foster Corporation Has a Joint Process,which Produces Three Products,A,B and C.Each

question 68

Essay

Foster Corporation has a joint process,which produces three products,A,B and C.Each product may be sold at split-off or processed further and then sold.Joint processing costs for a year are $40,000.Other relevant data are:
$\begin{array}{llll}&\text { Sales Value }&\text {Separable Processing }&\text {Sales Value }\\ \text {Product }&\text {at Split-Off}&\text {Costs after Split-Off }&\text { at Completion}\\A&\$ 15,500 & \$ 2,200 & \$ 17,700 \\B&18,000 & 8,000 & 23,000 \\C&24,000 & 11,500 & 37,500\end{array}$
Required:
A) Which products should be processed further? Why?
B) If the Foster Company maximizes profits, what is the operating income?

• A) Which products should be processed further? Why?
• B) If the Foster Company maximizes profits, what is the operating income?

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Definitions:

Fixture

An item that was once movable personal property but has been attached to, and becomes part of, the real estate.

Physical Attachment

The process of affixing or connecting an object to another, often in a manner that requires physical force or means.

Injury

Physical harm or damage to a person's body caused by an accident or external force.

Personal Property

Movable items owned by an individual or corporation, as opposed to real estate or real property.