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Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to split-off point total $320,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint product 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 Selling Price $14.00 per pound $ 8.00 per pound $ 20.00 per gallon Quarterly Output 11,800 pounds 18,500 pounds 3,000 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:

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to split-off point total $320,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint product 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 Selling Price $14.00 per pound $ 8.00 per pound $ 20.00 per gallon Quarterly Output 11,800 pounds 18,500 pounds 3,000 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:

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Exercise 6-7 (Algo) Sell or Process Further Decisions [LO6-7] Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $320,000 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 Selling Price $ 14.00 per pound $ 8.00 per pound $ 20.00 per gallon Product A B с 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 Quarterly Output 11,800 pounds 18,500 pounds 3,000 gallons $ 56,850 $ 80,875 $ 31,300 Selling Price $ 18.50 per pound $ 13.50 per pound $ 27.50 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:Exercise 6-7 (Algo) Sell or Process Further Decisions [LO6-7] Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $320,000 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 Selling Price $ 14.00 per pound $ 8.00 per pound $ 20.00 per gallon Product A B с 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 Quarterly Output 11,800 pounds 18,500 pounds 3,000 gallons $ 56,850 $ 80,875 $ 31,300 Selling Price $ 18.50 per pound $ 13.50 per pound $ 27.50 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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