Bolton Company Produced Three Joint Products at a Joint Cost

Essay

Bolton Company produced three joint products at a joint cost of $100,000.These products were processed further and sold as follows:
$\begin{array}{lll}\text{\underline { Product } }& {\text{\underline { Sales }}} & \text{\underline { Additional ProcessingCosts }} \\\text { A } & \$ 245,000 & \$ 200,000 \\\mathrm{B} & 330,000 & 300,000 \\\mathrm{C} & 175,000 & 100,000\end{array}$
The company has had an opportunity to sell at split-off directly to other processors.If that alternative had been selected,sales would have been:A,$56,000;B,$28,000;and C,$56,000.
The company expects to operate at the same level of production and sales in the forthcoming year.
Required: Consider all the available information and assume that all costs incurred after split-off are variable.
a. Could the company increase net income by altering its processing decisions? If so, what would be the expected overall net income?
b. Which products should be processed further and which should be sold at split-off?