qd 183. Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total$47,500 a year. The company allocates these costs to the joint products on the basis of their total sales values at thesplit-off point. Each product may be sold at the split-off point or processed further. Data concerning these productsappear below:Allocated joint processing costsSales value at split-off pointCosts of further processingSales value after further processingProduct X$ 28,500$ 30,000$ 24,600$ 48,600a.b.c. Minimum acceptable amountd. Minimum acceptable amountProduct Y$ 19,000$ 20,000$ 18,900$ 59,100Total$ 47,500$ 50,000$ 43,500$ 107,700Required:a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? (Negative amountshould be indicated by a minus sign.)b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point?c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?

ANSWER The formula to calculate Financial advantage (disadvantage ) of processing product beyond the…

Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $47,500 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below: Allocated joint processing costs Sales value at split-off point Costs of further processing Sales value after further processing Product X $ 28,500 $ 30,000 $ 24,600 $ 48,600 Product Y $ 19,000 $ 20,000 $ 18,900 $ 59,100 Total $ 47,500 $ 50,000 $ 43,500 $ 107,700 Required: a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? (Negative amount should be indicated by a minus sign.) b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point? c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point? d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?

Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $47,500 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below: Allocated joint processing costs Sales value at split-off point Costs of further processing Sales value after further processing Product X $ 28,500 $ 30,000 $ 24,600 $ 48,600 Product Y $ 19,000 $ 20,000 $ 18,900 $ 59,100 Total $ 47,500 $ 50,000 $ 43,500 $ 107,700 Required: a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? (Negative amount should be indicated by a minus sign.) b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point? c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point? d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 10CE: A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each...

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