Exercise 11-7 Sell or Process Further Decisions [LO11-7] Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $340,000 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: Quarterly Output 12,600 pounds 19,700 pounds 3,800 gallons Product Selling Price $ 18.00 per pound $ 12.00 per pound $ 24.00 per gallon 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: Selling Additional Product Processing Costs $66,090 $94,655 $39,460 Price $22.90 per pound $17.90 per pound $31.90 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 product or products should be processed further?
Exercise 11-7 Sell or Process Further Decisions [LO11-7] Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $340,000 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: Quarterly Output 12,600 pounds 19,700 pounds 3,800 gallons Product Selling Price $ 18.00 per pound $ 12.00 per pound $ 24.00 per gallon 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: Selling Additional Product Processing Costs $66,090 $94,655 $39,460 Price $22.90 per pound $17.90 per pound $31.90 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 product or products should be processed further?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 11-7 Sell or Process Further Decisions [LO11-7]
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the
split-off point total $340,000 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:
Quarterly
Output
12,600 pounds
19,700 pounds
3,800 gallons
Product
Selling Price
$ 18.00 per pound
$ 12.00 per pound
$ 24.00 per gallon
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:
Selling
Additional
Product Processing Costs
$66,090
$94,655
$39,460
Price
$22.90 per pound
$17.90 per pound
$31.90 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 product or
products should be processed further?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F28482ad1-4c50-41a0-8d98-ed5e58f8ed8b%2F32d5c8b8-63de-400d-8569-1df65f20aaf9%2Fjqy0674.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 11-7 Sell or Process Further Decisions [LO11-7]
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the
split-off point total $340,000 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:
Quarterly
Output
12,600 pounds
19,700 pounds
3,800 gallons
Product
Selling Price
$ 18.00 per pound
$ 12.00 per pound
$ 24.00 per gallon
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:
Selling
Additional
Product Processing Costs
$66,090
$94,655
$39,460
Price
$22.90 per pound
$17.90 per pound
$31.90 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 product or
products should be processed further?
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