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?
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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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