Business, 07.04.2020 01:12 tacoursey1987p6xy9s
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $340,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows:
Product Selling Price Quarterly Output
A $18.00 per pound 12,600 pounds
B $12.00 per pound 19,700 pounds
C $24.00 per gallon 3,800 gallons
Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below:
Product Additional Processing Costs Selling Price
A $66,090 $22.90 per pound
B $94,655 $17.90 per pound
C $39,460 $31.90 per gallon
Required:
1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point?
2. Based on your analysis in requirement 1, which product or products should be sold at the split-off point and which product or products should be processed further?
Answers: 3
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