Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $315,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products ab 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: Selling Price $ 13.00 per pound $ 7.00 per pound $ 19.00 per gallon Product Quarterly Output 11,600 pounds 18,200 pounds 2,800 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: Additional Processing Selling Price $ 17.40 per pound $ 12.40 per pound $ 26.40 per gallon Product Costs $ 54,640 $ 77,580 $ 29,360 A 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 nroducte chould bo prococcod fiirthor?
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $315,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products ab 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: Selling Price $ 13.00 per pound $ 7.00 per pound $ 19.00 per gallon Product Quarterly Output 11,600 pounds 18,200 pounds 2,800 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: Additional Processing Selling Price $ 17.40 per pound $ 12.40 per pound $ 26.40 per gallon Product Costs $ 54,640 $ 77,580 $ 29,360 A 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 nroducte chould bo prococcod fiirthor?
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter25: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 4CMA: Oakes Inc. manufactured 40,000 gallons of Mononate and 60,000 gallons of Beracyl in a joint...
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