Dorsey Company manufactures three products from a common Input In a joint processing operation. Jolnt processing costs up to the split-off polnt total $390,000 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 polnt. Unit selling prices and total output at the split-off polnt are as follows: Quarterly output 14,600 pounds 22,700 pounds 5,800 gallons Product Selling Price $ 28.00 per $ 22.00 per pound $ 34.00 per gallon в Each product can be processed further after the split-off polnt. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below. selling Price $33.90 per pound $28.90 per pound $42.90 per gallon Additional Product Processing Costs $ 91,990 $133,305 $ 62,660 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 polnt and whlch product or products should be processed further?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Dorsey Company manufactures three products from a common Input In a jolnt processing operation. Joint processing costs up to the
split-off polnt total $390,000 per quarter. For financlal reporting purposes, the company allocates these costs to the joint products on
the basis of their relative sales value at the split-off polnt. Unit selling prices and total output at the split-off polnt are as follows:
Quarterly
Output
14,600 pounds
22,700 pounds
5,800 gallons
Product
selling Price
$ 28.00 per pound
$ 22.00 per pound
$ 34.00 per gallon
A
B
Each product can be processed further after the split-off polnt. Additlonal processing requlres no special facilitles. The additional
processing costs (per quarter) and unit selling prices after further processing are given below:
Additional
Product Processing Costs
$ 91,990
$133,305
$ 62,660
selling
Price
$33.90 per pound
$28.90 per pound
$42.90 per gallon
A
B
Requlred:
1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off polnt?
2. Based on your analysis in requirement 1, which product or products should be sold at the split-off polnt and whlch product or
products should be processed further?
Transcribed Image Text:Dorsey Company manufactures three products from a common Input In a jolnt processing operation. Joint processing costs up to the split-off polnt total $390,000 per quarter. For financlal reporting purposes, the company allocates these costs to the joint products on the basis of their relative sales value at the split-off polnt. Unit selling prices and total output at the split-off polnt are as follows: Quarterly Output 14,600 pounds 22,700 pounds 5,800 gallons Product selling Price $ 28.00 per pound $ 22.00 per pound $ 34.00 per gallon A B Each product can be processed further after the split-off polnt. Additlonal processing requlres no special facilitles. The additional processing costs (per quarter) and unit selling prices after further processing are given below: Additional Product Processing Costs $ 91,990 $133,305 $ 62,660 selling Price $33.90 per pound $28.90 per pound $42.90 per gallon A B Requlred: 1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off polnt? 2. Based on your analysis in requirement 1, which product or products should be sold at the split-off polnt and whlch product or products should be processed further?
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