Selling Price Product $16 per pound $8 per pound $25 per gallon Quarterly Output 15,000 pounds 20,000 pounds 4,000 gallons A..... B... C...... Additional Processing Costs Selling Price Product $20 per pound $13 per pound $32 per gallon .3B $63,000 $80,000 A..... B.... Ç... $36,000
Sell or Process Further Decisions
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint
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:
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 he sold at the split-off point and which product or products should be processed further?
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