Check my work 6 Dorsey Company manufactures three products from a common input i
ID: 2536460 • Letter: C
Question
Check my work 6 Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $370,000 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 follow:s 10 points Quarterly Output Product Selling Price 24.00 per pound13,800 pounds 18.00 per pound 21,500 pounds 30.00 per galon 5,000 gallons eBook Hint 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: Print References Additional Processing Costs $ 81,150 $117,125 $52,900 Selling Price $29.50 per pound $24.50 per pound $38.50 per gallon Product B. 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?Explanation / Answer
a Product A Product B Product C Selling price after further processing 29.5 24.5 38.5 Selling price at the split-off point 24 18 30 Incremental revenue per pound or gallon 5.5 6.5 8.5 Total quarterly output in pounds or gallons 13800 21500 5000 Total incremental revenue 75900 139750 42500 Total incremental processing costs 81150 117125 52900 Financial advantage(disadvantage) -5250 22625 -10400 b Product A AND Product C should be sold at the split-off point Product B should be processed further