Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $355,000 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 $ 21.00 per pound 13,200 pounds B $ 15.00 per pound 20,600 pounds C $ 27.00 per gallon 4,400 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 $ 73,440 $ 26.20 per pound B $ 105,620 $ 21.20 per pound C $ 46,000 $ 35.20 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 pro
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $355,000 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 $ 21.00 per pound 13,200 pounds B $ 15.00 per pound 20,600 pounds C $ 27.00 per gallon 4,400 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 $ 73,440 $ 26.20 per pound B $ 105,620 $ 21.20 per pound C $ 46,000 $ 35.20 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 pro
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
| Product | Selling Price | Quarterly Output |
||||
| A | $ | 21.00 | per pound | 13,200 | pounds | |
| B | $ | 15.00 | per pound | 20,600 | pounds | |
| C | $ | 27.00 | per gallon | 4,400 | 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 | $ | 73,440 | $ | 26.20 | per pound |
| B | $ | 105,620 | $ | 21.20 | per pound |
| C | $ | 46,000 | $ | 35.20 | 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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