Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $99,000 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 $4 per pound 15,000 pounds B $5 per pound 20,000 pounds $12 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: Product Additional Processing Costs Selling Price A S 37,000 B $ 39,000 S 11,000 $5 per pound $8 per pound S 16 per gallon a. Compute the incremental profit (loss) for each product b. Which product or products should be sold at the split-off point? c. 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 $99,000 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 $4 per pound 15,000 pounds B $5 per pound 20,000 pounds $12 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: Product Additional Processing Costs Selling Price A S 37,000 B $ 39,000 S 11,000 $5 per pound $8 per pound S 16 per gallon a. Compute the incremental profit (loss) for each product b. Which product or products should be sold at the split-off point? c. Which product or products should be processed further?
Chapter1: Financial Statements And Business Decisions
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Problem 1Q
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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 $99,000 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
$4 per pound
15,000 pounds
B
$5 per pound
20,000 pounds
$12 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:
Product Additional Processing Costs Selling Price
A
S
37,000
B
$
39,000
S
11,000
$5 per pound
$8 per pound
S 16 per gallon
a. Compute the incremental profit (loss) for each product
b. Which product or products should be sold at the split-off point?
c. Which product or products should be processed further?
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