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Dorsey Company manuf processing costs up to th company allocates these point. Unit selling prices Product Selling Price Quarte A $ 24.00 per p

Dorsey Company manuf processing costs up to th company allocates these point. Unit selling prices Product Selling Price Quarte A $ 24.00 per p

FINANCIAL ACCOUNTING
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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Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $370,000 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 $24.00 per pound 13,800 pounds $18.00 per pound 21,500 pounds $ 30.00 per gallon 5,000 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: B с Product Additional Processing Costs Selling Price A $ 81,150 $ 29.50 B $ 117,125 $ 24.50 $ 52,900 $38.50 с per pound per pound 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?
Transcribed Image Text:Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $370,000 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 $24.00 per pound 13,800 pounds $18.00 per pound 21,500 pounds $ 30.00 per gallon 5,000 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: B с Product Additional Processing Costs Selling Price A $ 81,150 $ 29.50 B $ 117,125 $ 24.50 $ 52,900 $38.50 с per pound per pound 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?
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