Exercise 13-7 (Algo) Sell or Process Further Decisions [LO13-7]
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint
Product | Selling Price | Quarterly Output | ||
---|---|---|---|---|
A | $ 17.00 | per pound | 12,400 | pounds |
B | $ 11.00 | per pound | 19,400 | pounds |
C | $ 23.00 | per gallon | 3,600 | 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 | $ 63,720 | $ 21.80 | per pound |
B | $ 91,120 | $ 16.80 | per pound |
C | $ 37,360 | $ 30.80 | 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?
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- 6. Show your solution in good accounting formarrow_forwardNonearrow_forwardSplit Company produces three products — X, Y, and Z — from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Last year all three products were processed beyond split-off. Joint production costs for the year were $142,000. Sales values and costs needed to evaluate Split's production policy follow. Product Units Produced Sales Value at Split Off If Processed Further Sales Value Additional Costs x 16,000 $ 45,500 $ 107,500 $ 6,700 y 4,000 31,500 56,500 14,000 z 5,000 38,000 52,000 18,000 The amount of joint costs allocated to product X using the physical measure method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):arrow_forward
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