Scribd Logo
Upload

Welcome to Scribd!

  • Sales After Split-Off Point

    Uploaded by

    Eevan Salazar
    21 views1 page
    Wexpro produces product X15 from processing a rare mineral, with total material and processing costs of $60,000 per ton. 7,000 units of X15 are produced from each ton. X15 can be sold at the split-off point for $9 per unit, or processed further for $9,500 total additional cost but selling each unit for $12. Processing X15 further and selling at $12 per unit would lead to total revenue of $84,000 and total costs of $60,000 + $9,500 = $69,500, for a $14,500 profit. Selling at the split-off point would only gain $63,000 revenue. Therefore, X15 should

    Original Description:

    Original Title

    14-11

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    Wexpro produces product X15 from processing a rare mineral, with total material and processing costs of $60,000 per ton. 7,000 units of X15 are produced from each ton. X15 can be sold at the split-off point for $9 per unit, or processed further for $9,500 total additional cost but selling each unit for $12. Processing X15 further and selling at $12 per unit would lead to total revenue of $84,000 and total costs of $60,000 + $9,500 = $69,500, for a $14,500 profit. Selling at the split-off point would only gain $63,000 revenue. Therefore, X15 should

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    21 views1 page

    Sales After Split-Off Point

    Uploaded by

    Eevan Salazar
    Wexpro produces product X15 from processing a rare mineral, with total material and processing costs of $60,000 per ton. 7,000 units of X15 are produced from each ton. X15 can be sold at the split-off point for $9 per unit, or processed further for $9,500 total additional cost but selling each unit for $12. Processing X15 further and selling at $12 per unit would lead to total revenue of $84,000 and total costs of $60,000 + $9,500 = $69,500, for a $14,500 profit. Selling at the split-off point would only gain $63,000 revenue. Therefore, X15 should

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare mineral.

    Material and
    processing costs total $60,000 per ton, one-fourth of which is allocated to product X15. Seven thousand
    units of product X15 are produced from each ton of clypton. The units can either be sold at the split-off
    point for $9 each, or processed further at a total cost of $9,500 and then sold for $12 each.

    Required: Should product X15 be processed further or sold at the split-off point?

    Sales after split-off point:

    Sales= 7000*12=$84000

    Split-off cost= $9500

    Material and processing cost= $15000

    Total= $59500

    Wexpro, Inc. gains $11500 (59500-48000) by processing further X15. It is a financial advantage to
    compete with a more complex product. X15 should be processed further.

    You might also like