Faulk Company has a joint process which produces three products, AA, BB, and CC. Each product may be sold at split- off or processed further and then sold. Joint processing costs for a year amount to $30,000. Other relevant data are as follows: $\begin{array}{llll}
&&\text { Separable }\&&\text { Processing }\
\text { Product } & \begin{array}{l}
\text { Sales Value at } \
\text { Split-off }
\end{array} & \begin{array}{l}
\text { Costs after } \
\text { Split-off }
\end{array} & \begin{array}{l}
\text { Sales Value at } \
\text { Completion }
\end{array}\
\text { AA } & \$ 15,500 & \$ 2,200 & \$ 17,700 \
\text { BB } & 18,000 & 8,000 & 23,000 \
\text { CC } & 24,000 & 11,500 & 37,500
\end{array}$ Required:
a. What will be the effect on profits of processing each product further?
b. Assume the company maximizes profits, what is Faulk Company's operating income?

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The Answer of Faulk Company has a joint process which produces three products, AA, BB, and CC. Each product may be sold at split- off or processed further and then sold. Joint processing costs for a year amount to $30,000. Other relevant data are as follows: $\begin{array}{llll}
&&\text { Separable }\&&\text { Processing }\
\text { Product } & \begin{array}{l}
\text { Sales Value at } \
\text { Split-off }
\end{array} & \begin{array}{l}
\text { Costs after } \
\text { Split-off }
\end{array} & \begin{array}{l}
\text { Sales Value at } \
\text { Completion }
\end{array}\
\text { AA } & \$ 15,500 & \$ 2,200 & \$ 17,700 \
\text { BB } & 18,000 & 8,000 & 23,000 \
\text { CC } & 24,000 & 11,500 & 37,500
\end{array}$ Required:
a. What will be the effect on profits of processing each product further?
b. Assume the company maximizes profits, what is Faulk Company's operating income?

Faulk Company Has a Joint Process Which Produces Three Products