From a particular joint process, Watkins Company produces three products, X, Y, and Z.Each product may be sold at the point of split off or processed further. Additional processing
requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. In 19×1, all three products were processed beyond split off. Joint production costs for the year were $60,000. Sales values and costs needed to evaluate Watkins’s 19×1 production policy follow:
|
Additional Costs and Sales Values |
||||
|
If Processed Further |
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|
Units |
Sales Values |
Sales |
Added |
|
|
Product |
Produced |
at Split Off |
Values |
Costs |
|
X |
6,000 |
$25,000 |
$42,000 |
$9,000 |
|
Y |
4,000 |
41,000 |
45,000 |
7,000 |
|
Z |
2,000 |
24,000 |
32,000 |
8,000 |
Joint costs are allocated to the products in proportion to the relative physical volume of
output. Which of the products X, Y, and Z should Watkins subject to additional processing in
order to maximize profits?