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Exercise 13-7 (Algo) Sell or Process Further Decisions [LO13-7] Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $365,000 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: Selling Price Quarterly Output 13,600 pounds Product A $ 23.00 per pound B $ 17.00 per pound 21,200 pounds C $ 29.00 per gallon 4,800 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 $ 78,540 Selling Price $ 28.40 per pound Product A B $ 113,230 C $ 50,560 $ 37.40 per gallon $ 23.40 per pound 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2

Exercise 13-7 (Algo) Sell or Process Further Decisions [LO13-7] Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $365,000 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: Selling Price Quarterly Output 13,600 pounds Product A $ 23.00 per pound B $ 17.00 per pound 21,200 pounds C $ 29.00 per gallon 4,800 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 $ 78,540 Selling Price $ 28.40 per pound Product A B $ 113,230 C $ 50,560 $ 37.40 per gallon $ 23.40 per pound 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter8: Tactical Decision-making And Relevant Analysis
Section: Chapter Questions
Problem 64P: Sell or Process Further, Basic Analysis Shenista Inc. produces four products (Alpha, Beta, Gamma,...
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Exercise 13-7 (Algo) Sell or Process Further Decisions [LO13-7] Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $365,000 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: Selling Price Quarterly Output 13,600 pounds Product A $ 23.00 per pound B $ 17.00 per pound 21,200 pounds C $ 29.00 per gallon 4,800 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 $ 78,540 Selling Price $ 28.40 per pound Product A B $ 113,230 C $ 50,560 $ 37.40 per gallon $ 23.40 per pound 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2
Transcribed Image Text:Exercise 13-7 (Algo) Sell or Process Further Decisions [LO13-7] Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $365,000 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: Selling Price Quarterly Output 13,600 pounds Product A $ 23.00 per pound B $ 17.00 per pound 21,200 pounds C $ 29.00 per gallon 4,800 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 $ 78,540 Selling Price $ 28.40 per pound Product A B $ 113,230 C $ 50,560 $ 37.40 per gallon $ 23.40 per pound 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2
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