S Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $51,500 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below: Allocated joint processing costs Sales value at split-off point Costs of further processing Sales value after further processing Product X $ 10,900 $ 30,000 $ 23,200 $ 48,600 Product Y $ 20,600 $ 20,000 $ 17,500 $ 56,300 a b C Minimum acceptable amount d Minimum acceptable amount Total $ 51,500 $ 50,000 $ 40,700 $ 104,900 Required: a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? (Negative amount should be indicated by a minus sign.) b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point? c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point? d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Question

Subject: accounting 

 

S
Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $51,500 a year. The
company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be
sold at the split-off point or processed further. Data concerning these products appear below:
Allocated joint processing costs
Sales value at split-off point
Costs of further processing
Sales value after further processing
Product X
$ 30,900
$ 30,000
$ 23,200
$ 48,600
a
b
c. Minimum acceptable amount
d Minimum acceptable amount
Product Y
$ 20,600
$ 20,000
$ 17,500
$ 56,300.
Total
$ 51,500
$ 50,000
$ 40,700
$ 104,900
Required:
a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? (Negative amount should be
indicated by a minus sign.)
b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point?
c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?
d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?
Transcribed Image Text:S Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $51,500 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below: Allocated joint processing costs Sales value at split-off point Costs of further processing Sales value after further processing Product X $ 30,900 $ 30,000 $ 23,200 $ 48,600 a b c. Minimum acceptable amount d Minimum acceptable amount Product Y $ 20,600 $ 20,000 $ 17,500 $ 56,300. Total $ 51,500 $ 50,000 $ 40,700 $ 104,900 Required: a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? (Negative amount should be indicated by a minus sign.) b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point? c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point? d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?
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