Determine net income by product line, Managerial Economics

Assignment Help:

Fandem Technology manufactures two products using a joint process. The cost of materials going into the joint process for a typical period is $55,000, while labour and overhead to operate the process amount to $65,000. For this level of operations the firm obtains 10,000 pounds of product 1 and 30,000 pounds of product 2. Product 1 can be sold "as is" for $4 per pound. Product 2requires further processing costs of $2 per pound and is eventually sold for $7 per pound.

Required:

a. Determine net income by product line, if Tandem sells 7,000 pounds of product 1 and 26,000 pounds of product 2 in a particular period (assume Tandem has sufficient inventory and always produces the quantities stated above). Use the net realizable value method for allocating joint costs.

b. Assume the firm does not sell product 1, "as is", but instead incurs separate processing costs of $20,000 per batch to "finish" the product. The finished products sell for $5 per pound. Assume Tandem started a period with no beginning inventory and sold all 10,000 pounds of product 1 and all 30,000 pounds of product 2. What is the net income by product line for the period, again using the net realizable value method for allocating joint costs?

c. Assuming Tandem would sell the same number of "unfinished" units of product 1 as "finished" units, should it sell the product in its finished or unfinished form? Why?


Related Discussions:- Determine net income by product line

Marginal revenue (mr), Marginal Revenue (MR) This is the increase in T...

Marginal Revenue (MR) This is the increase in Total Revenue resulting from the sale of an extra unit of output.  Thus, if TR n-1 is Total Revenue from the sale of (n-1) units

Private cost and social cost, Why we need to distinguish between private co...

Why we need to distinguish between private cost and social cost?

Pigou effect, The pigou effect, also called the real balance effect, is nam...

The pigou effect, also called the real balance effect, is named after the well known Cambridge school economist Arthur Cecil pigou who had first clearly formulated the relationship

The effects of globalization on indian industry, Indian industry has progre...

Indian industry has progressed a lot because of globalization. A lot of development has been seen in Indian industry.

GDP, real GDP is increasingly criticized for its alleged failure to adequat...

real GDP is increasingly criticized for its alleged failure to adequately measure the standard of living. To what extent do you think this criticism is valid?

Explain the game theory, Q. Explain the Game theory? Game theory:   Ga...

Q. Explain the Game theory? Game theory:   Game theory is a branch of applied mathematics which is used in the social sciences, most particularly in economics, as well as in b

Walker''s theory of profit, Profit as rent of ability: one of the most wid...

Profit as rent of ability: one of the most widely known theories of profit was propounded by F.A. Walker. According to him profit is the rent of is the difference between the earn

Models of the firm, discuss the validity in zimbabwe of the grounds on whic...

discuss the validity in zimbabwe of the grounds on which the profit maximising model of the firm has been defended

Weighted-average costing - normal and abnormal spoilage, Weighted-average c...

Weighted-average costing: Normal and abnormal spoilage Ranka Company manufactures high-quality leather products. The Company's profits hav declined during the past 9 months. R

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd