Question

Manning Company uses a joint process to produce Products W, X, Y, and Z. Each product may be sold at its split-off point or processed further. Additional processing costs of specific products are entirely variable. Joint processing costs for a single batch of joint products are $120,000. Other relevant data are as follows: Product Sales Value at Split-Off Additional Processing Costs Sales Value of Final Product W $ 40,000 $ 60,000 $ 80,000 X 12,000 4,000 20,000 BY 20,000 32,000 120,000 Z 28,000 20,000 32,000 $100,000 $116,000 $252,000 Which products should Manning process further

Answer 1

Answer:

Y and X

Explanation:      

Product  Additional   Additional Costs   Difference   Decision                    Revenues                                                        

W            40000            60000               -20000        Sell Now    

X            8000                4000                4000        Process On    

Y           100000                32000        68000   Process On    

Z           4000                    20000       -16000          Sell Now

Answer 2

The products that Manning process further would be:

A). Y and X

Manning Process

As per the details provided, the Manning company must move on with the processes named X and Y.

The cause behind this is that they both generate additional revenues and additional cost differences of 4000 and 68000.

For the other two, the difference remains in minus i.e. -20000 and -16,000 and hence, they must not be continued further.

Thus, option A is the correct answer.

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The given question is incomplete. The complete question is as follows:

Manning Company uses a joint process to produce products W, X, Y, and Z. Each product may be sold at its split-off point or processed further. Additional processing costs of specific products are entirely variable. Joint processing costs for a single batch of joint products are $120,000. Other relevant data are as follows:

Which products should Manning process further?

A) All.

B) All except Z.

C) Y and X.

D) None.