Joint Products A101, A204, and B216. Sales and production information for each of the three adhesives are shown in the following table. Most of Johnston's customers ask for a special blend of the three products, which improves heat-resistance. The additional separable processing requires additional time and materials, and the price is increased accordingly, as shown in the table. Assume that Johnston pro- duces only for specific customer orders, so there is no beginning or ending inventory. Assume also that all of Johnston's customers requested the heat-resistant version of the products so that all produc- tion required additional separable processing. Total joint cost for the three products is $3,500,000. Johnston Adhesives Company makes three widely used industrial adhesives: A101 A204 B216 135,000 10 115,000 %24 Gallons sold 175,000 14 12 Final sales price per gallon Price at split-off Separable processing cost 10 10 $550,000 $125,000 $625,000

Joint Products A101, A204, and B216. Sales and production information for each of the three adhesives are shown in the following table. Most of Johnston's customers ask for a special blend of the three products, which improves heat-resistance. The additional separable processing requires additional time and materials, and the price is increased accordingly, as shown in the table. Assume that Johnston pro- duces only for specific customer orders, so there is no beginning or ending inventory. Assume also that all of Johnston's customers requested the heat-resistant version of the products so that all produc- tion required additional separable processing. Total joint cost for the three products is $3,500,000. Johnston Adhesives Company makes three widely used industrial adhesives: A101 A204 B216 135,000 10 115,000 %24 Gallons sold 175,000 14 12 Final sales price per gallon Price at split-off Separable processing cost 10 10 $550,000 $125,000 $625,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 17E

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