Unformatted text preview: ant costs and benefits incremental revenues from further processing
incremental costs of further processing ignore joint product costs (which are allocated common
ignore sunk costs consider qualitative factors Managerial Accounting 12-36 Joint Products: Sell Now vs. Process Further Decision rule: Process further if: Incremental revenues > incremental
costs of further processing Sell at split-off if: Incremental revenues < incremental
costs of further processing Managerial Accounting 12-37 Utilization of a Constrained Resource When a constraint exists, a company should select a product mix that maximizes the total
contribution margin earned since fixed costs
usually remain unchanged. A company should not necessarily promote those
products that have the highest unit contribution
margin. Rather, it should promote those products that earn the highest contribution margin in relation to
the constraining resource. Managerial Accounting 12-38 Utilization of a Constrained Resource: An Example
Ensign Company produces two products and selected data
are shown below: Managerial Accounting 12-39 Ut...
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This test prep was uploaded on 04/09/2014 for the course AFM 102 at Waterloo.