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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 $315,000 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:   Product Selling Price Quarterly Output A $ 13.00 per pound 11,600 pounds B $ 7.00 per pound 18,200 pounds C $ 19.00 per gallon 2,800 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:   Product Additional Processing Costs Selling Price A $ 54,640 $ 17.40 per pound B $ 77,580 $ 12.40 per pound C $ 29,360 $ 26.40 per gallon   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?

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $315,000 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:   Product Selling Price Quarterly Output A $ 13.00 per pound 11,600 pounds B $ 7.00 per pound 18,200 pounds C $ 19.00 per gallon 2,800 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:   Product Additional Processing Costs Selling Price A $ 54,640 $ 17.40 per pound B $ 77,580 $ 12.40 per pound C $ 29,360 $ 26.40 per gallon   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?

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing
Section: Chapter Questions
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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 $315,000 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:

 

Product Selling Price Quarterly Output
A $ 13.00 per pound 11,600 pounds
B $ 7.00 per pound 18,200 pounds
C $ 19.00 per gallon 2,800 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:

 

Product Additional Processing Costs Selling Price
A $ 54,640 $ 17.40 per pound
B $ 77,580 $ 12.40 per pound
C $ 29,360 $ 26.40 per gallon

 

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?

Product A B C Processing Costs $ 54,640 $ 77,580 $ 29,360 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? Selling Price $17.40 per pound $ 12.40 per pound $26.40 per gallon Complete this question by entering your answers in the tabs below. Required 1 Required 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? Sell at split-off point? Process further? Product A Product B Product C
Transcribed Image Text:Product A B C Processing Costs $ 54,640 $ 77,580 $ 29,360 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? Selling Price $17.40 per pound $ 12.40 per pound $26.40 per gallon Complete this question by entering your answers in the tabs below. Required 1 Required 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? Sell at split-off point? Process further? Product A Product B Product C
Product ABC Processing Costs $ 54,640 $ 77,580 $ 29,360 Selling Price $17.40 per pound $ 12.40 per pound $26.40 per gallon 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? (Do not round your intermediate calculations. Enter "disadvantages" as a negative value.) Financial advantage (disadvantage) of further processing Product A Product B Product C
Transcribed Image Text:Product ABC Processing Costs $ 54,640 $ 77,580 $ 29,360 Selling Price $17.40 per pound $ 12.40 per pound $26.40 per gallon 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? (Do not round your intermediate calculations. Enter "disadvantages" as a negative value.) Financial advantage (disadvantage) of further processing Product A Product B Product C
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