remaining S7H12 Two products LB and NH emerge from a joint p

remaining: S7H12 Two products, LB and NH, emerge from a joint process. Product LB has been allocated $30,300 of the total joint costs of $51,000. A total of 2,500 units of product LB are produced from Product LB can be sold at the split-off point for 14 per unit, or it can be processed further for an additional total cost of $10 500 and then sold for 16 per un ? product LB is processed f the and sold, what would be the effect on the overall profit of the company compared with sale in its unprocessed form directly afler the split-off point? the joint process O $29,500 more profit O $37800 less profit O$24,800 more profit O $5,500 less profit

Solution

FINAL SALES VALUE AFTER SPLIT FURTHER PROCESSING (2500*$16) = $40,000

LESS : SALES VALUE AT SPLIT OFF POINT ( 2500*$14) =($35,000)

INCREMENTAL REVENUE FROM FURTHER PROCESSING = $5,000

LESS: COST OF FURTHER PROCESSING = ($10,500)

PROFIT (LOSS) FROM FURTHER PROCESSING = ($5500)

$5,500 LESS PROFIT