Dock Corporation makes two products from a common input. Joint processing costs up to the split-off point total $33,600 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:| | Product X | Product Y | Total ||--------------------------|-----------|-----------|-----------|| Allocated joint processing costs | $16,800 | $16,800 | $33,600 || Sales value at split-off point | $24,000 | $24,000 | $48,000 || Costs of further processing | $15,000 | $18,700 | $33,700 || Sales value after further processing | $35,500 | $45,100 | $80,600 |**Question:**What is the financial advantage (disadvantage) for the company of processing Product X beyond the split-off point?- ○ $20,500- ○ ($3,500)- ○ $3,700- ○ $27,700**Explanation of Data:**The table presents data related to the costs and sales values of two products (X and Y) produced by Dock Corporation. It highlights the following aspects:- **Allocated Joint Processing Costs:** The costs assigned to each product before any additional processing.- **Sales Value at Split-Off Point:** The revenue that could be obtained if the products were sold at the initial stage without further processing.- **Costs of Further Processing:** Additional costs incurred to enhance the products beyond the split-off point.- **Sales Value After Further Processing:** The increased revenue potential following additional processing efforts.The financial analysis aims to determine whether processing Product X further beyond the split-off point is financially advantageous or disadvantageous.

Lets understand the basics. When one process produces more than one goods then these all are called joint products. Joint costs needs to allocate between the product based on any specific basis. Generally sales value at split of point is considered as a base for allocating joint costs between joint products. Sometime joint product can be further processed so management needs to decide whether it is beneficial to further process or not. For doing that, incremental profit analysis is required to make between split off point and sold after further process.So here in this case, Particulars If sold at split off If sold after further process Incremental Sales value 24,000 35,500 11,500 Less:- Allocated joint costs 16,800 16,800 0 Cost of further processing 15,000 15,000 Net income 7,200 3,700 (3,500) So there is financial disadvantage of ($3,500) if further processed. Therefore Option B is correct answer.

Business

Accounting

ated joint processing costs Product X Product Y Total $ 16,800 $ 16,800 $33,600 $24,000 $24,000 $48,000 s value at split-off point s of further processing $ 15,000 $18,700 $33,700 s value after further processing $ 35,500 $ 45,100 $80,600 is the financial advantage (disadvantage) for the company of processing Product X beyond the spl 20,500 $3,500) 3 700

ated joint processing costs Product X Product Y Total $ 16,800 $ 16,800 $33,600 $24,000 $24,000 $48,000 s value at split-off point s of further processing $ 15,000 $18,700 $33,700 s value after further processing $ 35,500 $ 45,100 $80,600 is the financial advantage (disadvantage) for the company of processing Product X beyond the spl 20,500 $3,500) 3 700

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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