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 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 Product A 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 C Selling Price $ 16 per pound $8 per pound $25 per gallon Additional Processing Costs $ 63,000 $ 80,000 $ 36,000 Required 1 Quarterly Output 15,000 pounds 20,000 pounds 4,000 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? Selling Price $20 per pound $ 13 per pound $ 32 per gallon Complete this question by entering your answers in the tabs below. Required 2
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 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 Product A 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 C Selling Price $ 16 per pound $8 per pound $25 per gallon Additional Processing Costs $ 63,000 $ 80,000 $ 36,000 Required 1 Quarterly Output 15,000 pounds 20,000 pounds 4,000 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? Selling Price $20 per pound $ 13 per pound $ 32 per gallon Complete this question by entering your answers in the tabs below. Required 2
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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Transcribed Image Text: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
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
$ 16 per pound
$8 per pound
$25 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
$ 63,000
$ 80,000
$ 36,000
Quarterly Output
15,000 pounds
20,000 pounds
4,000 gallons
Selling Price
$ 20 per pound
$ 13 per pound
$32 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 should be
processed further?
Required 1 Required 2
Complete this question by entering your answers in the tabs below.
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