Mickey Company Manufactures Three Joint Products: X, Y, and Z

Essay

Mickey Company manufactures three joint products: X, Y, and Z. The cost of the joint process is £30,000. Information about the three products follows: $$\begin{array} { l r r r } & \mathrm { X } & \mathrm { Y } & { \mathrm { Z } } \\\text { Anticipated production } & 5,600 \mathrm { kgs } & 10,000 \mathrm { kgs } & 2,500 \mathrm { kgs } . \\\text { Selling price/kg. at split-off } & £ 2.00 & £ 1.00 & £ 3.00 \\\text { Additional processing costs/kg. } & & & \\ \text { after split-off (all variable) }& £ 1.50 & £ 1.25 & £ .75 \\\text { Selling price/kg. after } & & & \\ \text { further processing }& £ 2.50 & £ 3.75 & £ 6.25 \\\text { Allocated joint costs }& £ 12,000 & £ 10,500 & £ 7,500\end{array}$$
a.Determine whether each product should be sold at split-off or processed further. Show all supporting calculations in good form.
b.Determine the firm's income if the firm processed all three products beyond split-off.