Bowen Company makes two products from a joint production process. Each product may be sold at...

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Bowen Company makes two products from a joint production process. Each product may be sold at...

Bowen Company makes two products from a joint production process. Each product
may be sold at the split-off point or processed further. Information concerning
these products appears below:

                                              Product X      Product Y
Allocated joint costs ....................     $25,000        $18,000
Sales value after further processing .....     $47,000        $41,000
Sales value at the split-off point .......     $28,000        $23,000
Additional processing costs ..............     $16,000        $17,000

Assume Bowen chooses to process Product X further and then sell it rather than
sell Product X at the split-off point.

Calculate the amount of the increase in company profits due to this decision.

business accounting

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Answer 1

Answer #1

Calculate incremental profit of Product X

	Product X
Sales value after further processing	47000
Sales value at split off	28000
Incremental revenue	19000
Incremental cost	-16000
Incremental profit (loss)	3000

Increase in Company's profit = $3000

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Answer 2

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