Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $330,000 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 B C Product Selling Price $ 16.00 per pound $ 10.00 per pound $22.00 per gallon 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: B с Additional Processing Costs $ 61,390 $ 87,645 $ 35,300 Quarterly Output 12,200 pounds 19,100 pounds 3,400 gallons 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 should be processed further? Required 1 Selling Price $ 20.70 per pound $15.70 per pound $29.70 per gallon Complete this question by entering your answers in the tabs below. Required 2 What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? Note: Do not round your intermediate calculations. Enter "disadvantages" as a negative value. Financial advantage (disadvantage) of further processing < Required 1 Product A Product B Required 2 > Product C
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $330,000 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 B C Product Selling Price $ 16.00 per pound $ 10.00 per pound $22.00 per gallon 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: B с Additional Processing Costs $ 61,390 $ 87,645 $ 35,300 Quarterly Output 12,200 pounds 19,100 pounds 3,400 gallons 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 should be processed further? Required 1 Selling Price $ 20.70 per pound $15.70 per pound $29.70 per gallon Complete this question by entering your answers in the tabs below. Required 2 What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? Note: Do not round your intermediate calculations. Enter "disadvantages" as a negative value. Financial advantage (disadvantage) of further processing < Required 1 Product A Product B Required 2 > Product C
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 10CE: A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each...
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