BKC Limited produces three joint products in one common process but each product is capable of being further processed separately after the split-off point. The estimated data given below relate to January 2017:
Product B Product K Product C
€ € €
Selling price at
the split-off point 10 18 20
after further processing 20 30 45
Post separation point costs 33,000 35,000 42,300
Output in Litres 7,000 5,000 4,000
Pre-separation point joint costs are estimated to be €60,000 and it is current practice to apportion these costs to the three products according to litres produced.
- Prepare a statement of estimated profit or loss for each product and in total for January 2017 if all three products are processed further.
- Advise how profit could be maximised if one or more products are sold at the split-off point. Your advice should be supported by a profit statement.