Reference no: EM132535884

Gusler company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $98,000 per quarter. The company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows:

Product                              Selling Price                      Quarterly Output

A                                   $3  per pound                   10,000 pounds

B                                  $6 per pound                   22,000 pounds

C                                    $13 per gallon                  5,000 gallons

Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below:

Product Additional                              Processing Costs                   Selling Price

A                                                    $53,000                           $6 per pound

B                                                    $ 38,000                        $ 12 per pound

C                                                      $18,000                        $19 per gallon

Question 1: Which products should be processed further?

Multiple Choice

Option 1: B and C

Option 2: A and B

Option 3: A and C

Option 4: A, B, and C