ch12-AFM102s2012

It will always be profitable to continue processing a

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Unformatted text preview: sts incurred after the split-off point. Managerial Accounting 12-32 Sell or Process Further: An Example Sawmill, Inc. cuts logs from which unfinished Sawmill, Inc. cuts logs from which unfinished llumber and sawdust are the immediate joint umber and sawdust are the immediate joint products. products. Unfinished lumber is sold “as is” or processed Unfinished lumber is sold “as is” or processed further into finished lumber. further into finished lumber. Sawdust can also be sold “as is” to gardening Sawdust can also be sold “as is” to gardening wholesalers or processed further into “prestowholesalers or processed further into “prestologs.” logs.” Managerial Accounting 12-33 Sell or Process Further Data about Sawmill’s joint products includes: S ales value at the split-off point S ales value after further processing Allocated joint product costs Cost of further processing Managerial Accounting Per Log Lumber Sawdust $ 140 $ 40 270 176 50 50 24 20 12-34 Sell or Process Further Analysis of Sell or Process Further Per Log Lumber Sales value after further processing Sales value at the split-off point Incremental revenue Cost of further processing Profit (loss) from further processing $ $ 270 140 130 50 80 Sawdust $ $ Should we process the lumber further and sell the sawdust “as is?” Managerial Accounting 50 40 10 20 (10) 12-35 Joint Products: Sell Now vs. Process Further focus on relevant costs and benefits do not focus on irrelev...
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