Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $380,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products based on 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 $26.00 per pound B $ 20.00 per pound C $ 32.00 per gallon 5,400 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 $ 86,490 $31.70 B $ 125,095 $ 26.70 $ 57,700 $ 40.70 с 14,200 pounds 22,100 pounds per pound per pound 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 $380,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products based on 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 $26.00 per pound B $ 20.00 per pound C $ 32.00 per gallon 5,400 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 $ 86,490 $31.70 B $ 125,095 $ 26.70 $ 57,700 $ 40.70 с 14,200 pounds 22,100 pounds per pound per pound 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 13P: Venezuela Oil Inc. transports crude oil to its refinery where it is processed into main products...
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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 $380,000 per quarter. For financial reporting purposes, the company allocates these
costs to the joint products based on 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
$26.00
per pound
14,200 pounds
B
$ 20.00
per pound
22,100 pounds
$ 32.00
per gallon
5,400 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
$ 86,490
$ 31.70
B
$ 125,095
$ 26.70
$ 57,700
$ 40.70
с
per pound
per pound
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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F970bd1a5-ec8e-4093-8db1-5fe4658a27aa%2Ff3ab8a2f-dca8-4e2a-9443-b8d508f5b5a5%2F113qe6l_processed.jpeg&w=3840&q=75)
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 $380,000 per quarter. For financial reporting purposes, the company allocates these
costs to the joint products based on 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
$26.00
per pound
14,200 pounds
B
$ 20.00
per pound
22,100 pounds
$ 32.00
per gallon
5,400 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
$ 86,490
$ 31.70
B
$ 125,095
$ 26.70
$ 57,700
$ 40.70
с
per pound
per pound
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?
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