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Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $395,000 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 с Product 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: ABC А B Selling Price $29.00 per pound $23.00 per pound $ 35.00 per gallon с Additional Processing Costs Quarterly Output 14,800 pounds 23,000 pounds 6,000 gallons $ 94,800 $ 137,500 $ 65,200 Selling Price $ 35.00 per pound $ 30.00 per pound $ 44.00 per gallon

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $395,000 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 с Product 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: ABC А B Selling Price $29.00 per pound $23.00 per pound $ 35.00 per gallon с Additional Processing Costs Quarterly Output 14,800 pounds 23,000 pounds 6,000 gallons $ 94,800 $ 137,500 $ 65,200 Selling Price $ 35.00 per pound $ 30.00 per pound $ 44.00 per gallon

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
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 processing costs up to the split-off point total $395,000 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 с Product A Selling Price $29.00 per pound $23.00 per pound $ 35.00 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: с Additional Processing Costs Quarterly Output 14,800 pounds 23,000 pounds 6,000 gallons $ 94,800 $ 137,500 $ 65,200 Selling Price $ 35.00 per pound $ 30.00 per pound $44.00 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?
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 $395,000 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 с Product A Selling Price $29.00 per pound $23.00 per pound $ 35.00 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: с Additional Processing Costs Quarterly Output 14,800 pounds 23,000 pounds 6,000 gallons $ 94,800 $ 137,500 $ 65,200 Selling Price $ 35.00 per pound $ 30.00 per pound $44.00 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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