Faulk Company has a joint process, which produces three products, X, Y, and Z. Each product may be sold at spli-'off or processed further and then sold. Joint processing costs for a year amount to $30,000. Other relevant data are as follows:
Sales Value Costs after Sales Value
Product at Split-off Split-off at Completion
X $15,500 $2,200 $17,700
Y 18,000 8,000 23,000
Z 24,000 11,500 37,500
a. What will be the effect on profits of processing each product further?
b. Assume the company maximizes profits, what is Faulk Company's operating income?
This question was answered on: Sep 16, 2020
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