Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $315,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products ab 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: Selling Price $ 13.00 per pound $ 7.00 per pound $ 19.00 per gallon Product Quarterly Output 11,600 pounds 18,200 pounds 2,800 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: Additional Processing Selling Price $ 17.40 per pound $ 12.40 per pound $ 26.40 per gallon Product Costs $ 54,640 $ 77,580 $ 29,360 A 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 nroducte chould bo prococcod fiirthor?

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $315,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products ab 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: Selling Price $ 13.00 per pound $ 7.00 per pound $ 19.00 per gallon Product Quarterly Output 11,600 pounds 18,200 pounds 2,800 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: Additional Processing Selling Price $ 17.40 per pound $ 12.40 per pound $ 26.40 per gallon Product Costs $ 54,640 $ 77,580 $ 29,360 A 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 nroducte chould bo prococcod fiirthor?

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 $365,000 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 $23.00 per pound $17.00 per pound $29.00 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 $78,540 $ 113,230 $50,560 Quarterly Output 13,600 pounds 21,200 pounds 4,800 gallons 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…
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