Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $390,000 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 A B C Selling Price $28.00 per pound $22.00 per pound $34.00 per gallon. 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 Product Processing Costs $91,990 A B $ 133, 305 C $62, 660 Quarterly Output 14, 600 pounds 22, 700 pounds 5, 800 gallons Required 1 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? Selling Price $33.90 per pound $28.90 per pound $42.90 per gallon Complete this question by entering your answers in the tabs below. Required 2 What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? (Do not round your intermediate calculations. Enter "disadvantages" as a negative value.) Financial advantage (disadvantage) of further processing < Required 1 Product A Product B Required 2 > Product C
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $390,000 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 A B C Selling Price $28.00 per pound $22.00 per pound $34.00 per gallon. 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 Product Processing Costs $91,990 A B $ 133, 305 C $62, 660 Quarterly Output 14, 600 pounds 22, 700 pounds 5, 800 gallons Required 1 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? Selling Price $33.90 per pound $28.90 per pound $42.90 per gallon Complete this question by entering your answers in the tabs below. Required 2 What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? (Do not round your intermediate calculations. Enter "disadvantages" as a negative value.) Financial advantage (disadvantage) of further processing < Required 1 Product A Product B Required 2 > Product C
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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 $390,000 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
A
B
C
Selling Price
$28.00 per pound
$22.00 per pound
$34.00 per gallon.
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
Product Processing Costs
A
$91,990
B
$ 133, 305
C
$62, 660
Quarterly Output
14, 600 pounds
22, 700 pounds
5, 800 gallons
Required 1
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?
Selling Price
$33.90 per pound
$28.90 per pound
$42.90 per gallon
Complete this question by entering your answers in the tabs below.
Required 2
What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point?
(Do not round your intermediate calculations. Enter "disadvantages" as a negative value.)
Financial advantage (disadvantage) of further processing
< Required 1
Product A
Product B
Required 2 >
Product C
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