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Mars2501 [29]
2 years ago
3

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the

split-off point total $360,000 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 $ 22.00 per pound 13,400 pounds B $ 16.00 per pound 20,900 pounds C $ 28.00 per gallon 4,600 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 $ 75,970 $ 27.30 per pound B $ 109,395 $ 22.30 per pound C $ 48,260 $ 36.30 per gallon Required: 1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point
Business
1 answer:
erastova [34]2 years ago
6 0

Answer:

Solution and Explanation:

1    

                                                    Product A Product B Product C

Selling price after further processing     27.30       22.3            36.30

Selling price at the split-off point              22.00        16.00    28.00

Incremental revenue per pound or gallon 5.30 6.30    8.30

Total quarterly output in pounds or gallons 13400 20900    4600

Total incremental revenue                            71020   131670    38180

Total incremental processing costs           75970 109395    48260

Financial advantage (disadvantage)

of further processing                                    (4950) 22275 (10080)

   

2    

Product A and Product C should be sold at the split-off point    

Product B should be processed further    

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