Faulk Company Has a Joint Process Which Produces Three Products

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 company should continue to...

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