Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Textbook Question
Chapter 13, Problem 15Q
What guideline should be used in determining whether a joint product should be sold at the split-off point or processed further?
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What should be considered when deciding whether a joint product should be sold at the split-off point or 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 $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…
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…
Chapter 13 Solutions
Managerial Accounting
Ch. 13.A - EXERCISE 12A-1 Absorption Costing Approach to...Ch. 13.A - EXERCISE 12A-2 Customer Latitude and Pricing...Ch. 13.A - Prob. 3ECh. 13.A - Prob. 4ECh. 13.A - Prob. 5ECh. 13.A - EXERCISE 12A-6 Value-Based Pricing; Absorption...Ch. 13.A - Prob. 7ECh. 13.A - Prob. 8PCh. 13.A - Prob. 9PCh. 13.A - Prob. 10P
Ch. 13.A - Prob. 11PCh. 13.A -
PROBLEM 12A-12 Absorption Costing Approach to...Ch. 13.A - PROBLEM 12A-13 Value-Based Pricing LO12-10 The...Ch. 13 - Prob. 1QCh. 13 - Prob. 2QCh. 13 - Prob. 3QCh. 13 - Prob. 4QCh. 13 - “Variable costs and differential costs mean the...Ch. 13 - 12-6 "All future costs are relevant in decision...Ch. 13 - Prentice Company is considering dropping one of...Ch. 13 - Prob. 8QCh. 13 - 12-9 What is the danger in allocating common fixed...Ch. 13 - 12-10 How does opportunity cost enter into a make...Ch. 13 - 12-11 Give at least four examples of possible...Ch. 13 - 12-12 How will relating product contribution...Ch. 13 - Define the following terms: joint products, joint...Ch. 13 - 12-14 From a decision-making point of view, should...Ch. 13 - What guideline should be used in determining...Ch. 13 - Prob. 16QCh. 13 - Prob. 1AECh. 13 - Prob. 2AECh. 13 - Cane Company manufactures two products called...Ch. 13 - (
Alpha Beta
$30
$...Ch. 13 - Prob. 3F15Ch. 13 - Prob. 4F15Ch. 13 - Prob. 5F15Ch. 13 - (
Alpha Beta
$30
$...Ch. 13 - Prob. 7F15Ch. 13 -
Cane Company manufactures two products called...Ch. 13 - Prob. 9F15Ch. 13 - (
Alpha Beta
$30
$...Ch. 13 - Prob. 11F15Ch. 13 - Prob. 12F15Ch. 13 - (
Alpha ...Ch. 13 - (
Alpha Beta
$30
$...Ch. 13 - (
Alpha Beta
$30
$...Ch. 13 -
EXERCISE 12-1 Identifying Relevant Costs...Ch. 13 -
EXERCISE 12-2 Dropping or Retaining a Segment...Ch. 13 -
EXERCISE 12-3 Make or Buy Decision LO12-3
Troy...Ch. 13 -
EXERCISE 12-4 Special Order Decision...Ch. 13 -
EXERCISE 12-5 Volume Trade-Off Decisions...Ch. 13 - Prob. 6ECh. 13 - Prob. 7ECh. 13 - Prob. 8ECh. 13 - Prob. 9ECh. 13 - Prob. 10ECh. 13 - (
$3.60
10.00
2.40
9.00
$25.00
)
EXERCISE 12-11...Ch. 13 - Prob. 12ECh. 13 - EXERCISE 12-13 Sell or Process Further Decision...Ch. 13 - en
r
Ch. 13 - Prob. 15ECh. 13 - (
$150
31
20
29
3
24
15
$272
$34
)
EXERCISE...Ch. 13 - Prob. 17ECh. 13 - Prob. 18PCh. 13 - PROBLEM 12-19 Dropping or Retaining a Segment...Ch. 13 -
PROBLEM 12-20 Sell or Process Further Decision...Ch. 13 - Prob. 21PCh. 13 - PROBLEM 12-22 Special Order Decisions LO12-4...Ch. 13 -
PROBLEM 12-23 Make or Buy Decision LO12-3
Silven...Ch. 13 - Prob. 24PCh. 13 - Prob. 25PCh. 13 - Prob. 26PCh. 13 - Prob. 27PCh. 13 - Prob. 28PCh. 13 - CASE 12-29 Sell or Process Further Decision LO12-7...Ch. 13 -
CASE 12-30 Ethics and the Manager; Shut Dora or...Ch. 13 - CASE 12-31 Integrative Case: Relevant Costs;...Ch. 13 -
CASE 12-32 Make or Buy Decisions; Volume...Ch. 13 - Prob. 33C
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Are allocated joint processing costs relevant when making a decision to sell a joint product at the split-off point or process it further? Why?arrow_forwardWhat is the decision rule for selling a product as is or processing it further?arrow_forwardA decision that involves potential further processing of joint products is which kind of decision? relevant make-or-buy sell-or-process-further special-order keep-or-droparrow_forward
- What are joint costs? How do they affect the sell or process further decision?arrow_forwardUsing a physical measurement method, what amount of joint processing cost is allocated to product B? Using sales value at split-off, what amount of joint processing cost is allocated to Product B?arrow_forwardDorsey 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 A B с Selling Price $13.00 per pound $ 7.00 per pound $19.00 per gallon Product A B с 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 Quarterly Output 11,600 pounds 18,200 pounds 2,800 gallons $ 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…arrow_forward
- Sell at Split-Off or Process Further Decision, Alternatives, Relevant Costsarrow_forwardWhat is a general rule to remember with respect to a sell-or-process-further environment, and what costs are irrelevant to the decision?arrow_forwardWhich products should Jenny sell at split-off, and which products be processed later?arrow_forward
- Calculate the lowest acceptable transfer price for the seller (Division A) ?arrow_forwardhow to allocate the cost of joint products and byproducts?arrow_forwardDetermining the transfer price as the price at which the product or service transferred could be sold to outside buyers is known as the Oa. cost price approach Ob. negotiated price approach Oc. market price approach Od. revenue price approacharrow_forward
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