Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $340,000 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 $18.00 per pound $ 12.00 per pound $ 24.00 per gallon Product A B C 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 Processing Costs $ 66,090 Quarterly Output 12,600 pounds 19,700 pounds 3,800 gallons $ 94,655 $ 39,460 Selling Price $ 22.90 per pound. $17.90 per pound. $31.90 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?

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $340,000 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 $18.00 per pound $ 12.00 per pound $ 24.00 per gallon Product A B C 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 Processing Costs $ 66,090 Quarterly Output 12,600 pounds 19,700 pounds 3,800 gallons $ 94,655 $ 39,460 Selling Price $ 22.90 per pound. $17.90 per pound. $31.90 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?

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter6: Process Cost Accounting—additional Procedures; Accounting For Joint Products And By-products

Section: Chapter Questions

Problem 13P: Venezuela Oil Inc. transports crude oil to its refinery where it is processed into main products...

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Question

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs
up to the split-off point total $340,000 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
A
B
C
Product
A
$18.00 per pound.
$ 12.00 per pound
$24.00 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:
B
C
Additional
Processing
Costs
$ 66,090
$ 94,655
$ 39,460
Quarterly Output
12,600 pounds
19,700 pounds
3,800 gallons
Selling Price
$ 22.90 per pound
$17.90 per pound
$31.90 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 ocessed further?
Required 1
Complete this question by entering your answers in the tabs below.
Required 2
< Prev
4 of 8
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what
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?
Complete this question by entering your answers in the tabs below.
Required 1 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
E
< Required 1
< Prev
4 of 8
Product A
#
Product B
Required 2 >
Next >
Product C

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