Stoffers Corporation Manufactures Products J, K, and L in a Joint

Essay

Stoffers Corporation manufactures products J, K, and L in a joint process. The company incurred $480,000 of joint processing costs during the period just ended and had the following data that related to production:
An analysis revealed that all costs incurred after the split-off point are variable and directly traceable to the individual product line.
Required:
A. If Stoffers allocates joint costs on the basis of the products' sales values at the split-off point, what amount of joint cost would be allocated to product J?
B. If production of J totaled 50,000 gallons for the period, determine the relevant cost per gallon that should be used in decisions that explore whether to sell at the split-off point or process further? Briefly explain your answer.
C. At the beginning of the current year, Stoffers decided to process all three products beyond the split-off point. If the company desired to maximize income, did it err in regards to its decision with product J? Product K? Product L? By how much?