Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $350,000 per quarter. 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 . . . . . . . . . . $16 per pound 15,000 pounds B . . . . . . . . . . $8 per pound 20,000 pounds C . . . . . . . . . . $25 per gallon 4,000 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: Product Additional Processing Costs Selling Price A . . . . . . . . $63,000 $20 per pound B . . . . . . . . $80,000 $13 per pound C . . . . . . . . $36,000 $32 per gallon Required: Which product or products should be sold at the split-off point and which product or products should be processed further? Show computations.
Dorsey Company manufactures three products from a common input in a joint processing
operation. Joint
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 . . . . . . . . . . $16 per pound 15,000 pounds
B . . . . . . . . . . $8 per pound 20,000 pounds
C . . . . . . . . . . $25 per gallon 4,000 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:
Product Additional Processing Costs Selling Price
A . . . . . . . . $63,000 $20 per pound
B . . . . . . . . $80,000 $13 per pound
C . . . . . . . . $36,000 $32 per gallon
Required: Which product or products should be sold at the split-off point and which product or
products should be processed further? Show computations.
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