Asked by Wally Coveny on May 06, 2024
Verified
If product B is processed beyond the split-off point, the financial advantage (disadvantage) as compared to selling B at the split-off point would be:
A) $36,000 per production run
B) $96,000 per production run
C) ($42,000) per production run
D) ($10,000) per production run
Split-off Point
The stage in the production process where multiple products become separately identifiable, often relevant in costing and decision-making processes.
Financial Advantage
The benefit gained in financial terms that gives an individual or entity a better position compared to others.
Production Run
A specific period or batch of production where goods are manufactured continuously, often tracked to analyze efficiencies and costs.
- Analyze the financial implications of processing products beyond the split-off point.
Verified Answer
Mae Refiners, Inc., processes sugar cane that it purchases from farmers.Sugar cane is processed in batches.A batch of sugar cane costs $60 to buy from farmers and $13 to crush in the company's plant.Two intermediate products, cane fiber and cane juice, emerge from the crushing process.The cane fiber can be sold as is for $29 or processed further for $13 to make the end product industrial fiber that is sold for $61.The cane juice can be sold as is for $40 or processed further for $28 to make the end product molasses that is sold for $67.
Learning Objectives
- Analyze the financial implications of processing products beyond the split-off point.
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