Arcadia, SA, Uses a Joint Process to Produce Products W

Essay

Arcadia, SA, uses a joint process to produce Products W, X, Y, Z. Each product may be sold at its split-off point or processed further. Additional processing costs of specific products are entirely variable. Joint processing costs for a single batch of joint products are £200,000. Other relevant data are as follows: $\begin{array}{ccc}&\text { Sales Value }&\text { Additional }&\text {Sales Value of }\\\text { Product } & \text { at Split-off }& \text { Processing Costs } &\text { Final Froduct }\\W&£ 40,000 & £ 24,000 & £ 70,000 \\X&16,000 & 10,000 & 20,000 \\ Y&20,000 & 10,000 & 48,000 \\ Z&24,000 & 16,000 & 36,000 \\&£ 100,000 &£ 60,000& £174,00 \\\end{array}$
a.Determine which products should be processed further.
b.How will processing each product further affect profits?