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Question - Thomas Company, a new firm, manufactures two products, Q and R, in a common process. The joint costs amount to $42,000 per batch of finished goods. Each batch results in 10,000 litres of output, of which 70% are Q and 30% are R. The unit selling price for Q is $4 and for R is $8 at the split-off point.
However, the two products are processed beyond the split-off point, with Thomas incurring the following separable costs: Q, $0.50 per litre; R, $1.00 per litre. After the additional processing, the selling price of Q is $6.50 per litre, and the selling price of R is $12.00 per litre.
Assume that Thomas sold all of its production of Q and R during the current accounting period. Determine Thomas incremental net profit.
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