Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $390,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products based on their relativé sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Selling Price $28.00 per pound Quarterly Output 14,600 pounds Product A BC B $ 22.00 per pound 22,700 pounds C $ 34.00 per gallon 5,800 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: Product A Additional Processing Costs $ 91,990 Selling Price $ 33.90 per pound B $ 133,305 $ 28.90 per pound C $ 62,660 $ 42.90 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 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 $390,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products based on their relativé sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Selling Price $28.00 per pound Quarterly Output 14,600 pounds Product A BC B $ 22.00 per pound 22,700 pounds C $ 34.00 per gallon 5,800 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: Product A Additional Processing Costs $ 91,990 Selling Price $ 33.90 per pound B $ 133,305 $ 28.90 per pound C $ 62,660 $ 42.90 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 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 14E: LeMoyne Manufacturing Inc.’s joint cost of producing 2,000 units of Product X, 1,000 units of...

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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 $315,000 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 Quarterly Output A $ 13.00 per pound 11,600 pounds B $ 7.00 per pound 18,200 pounds с $ 19.00 per gallon 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 Costs Selling Price $ 17.40 per pound Product A $ 54,640 B $ 77,580 $ 12.40 per pound C $ 29,360 $ 26.40 per gallon Required: 1. What is the financial advantage (disadvantage) of further processing…