Two products, LB and NH, emerge from a joint process. Product LB has been allocated P30,800 of the total joint costs of P44,000. A total of 2,000 units of product LB are produced from the joint process. Product LB can be sold at the split-off point for P13 per unit, or it can be processed further for an additional total cost of P14,000 and then sold for P15 per unit. If product LB is processed further and sold, what would be the effect on the overall profit of the company compared with sale in its unprocessed form directly after the split-off point?

Two products, LB and NH, emerge from a joint process. Product LB has been allocated P30,800 of the total joint costs of P44,000. A total of 2,000 units of product LB are produced from the joint process. Product LB can be sold at the split-off point for P13 per unit, or it can be processed further for an additional total cost of P14,000 and then sold for P15 per unit. If product LB is processed further and sold, what would be the effect on the overall profit of the company compared with sale in its unprocessed form directly after the split-off point?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 27E: Pacheco, Inc., produces two products, overs and unders, in a single process. The joint costs of this...

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