Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 10, Problem 10EB
Balcom Dairy gathered this data about the two products that it produces:
Which of the products should be processed further?
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Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the
split-off point total $350,000 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:
Selling Price
$ 16 per pound
$ 8 per pound
$ 25 per gallon
Product
Quarterly Output
15,000 pounds
20,000 pounds
4,000 gallons
A
В
C
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
Product
$ 63,000
$ 80,000
$ 36,000
Selling Price
$ 20 per pound
$ 13 per pound
$ 32 per gallon
A
В
C
Required:
1. What is the financial advantage (disadvantage) of further processing each of the three…
Suppose that a firm produces two products. How should the farm select a product for placing the most emphasis for production and selling?
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the
split-off point total $310,000 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:
Product
A
B
C
Selling Price
$ 12.00 per pound
$ 6.00 per pound
$18.00 per gallon
Product
A
B
C
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
$ 52,470
$ 74,345
$ 27,460
Quarterly Output
11,400 pounds
17,900 pounds
2,600 gallons
Required 1
Required:
1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point?
2. Based on…
Chapter 10 Solutions
Principles of Accounting Volume 2
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