MANAGERIAL ACCOUNTING
17th Edition
ISBN: 9781266397820
Author: Garrison
Publisher: 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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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?
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…
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…
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
- What should be considered when deciding whether a joint product should be sold at the split-off point or processed further?arrow_forwardWhat are joint costs? How do they affect the sell or process further decision?arrow_forwardWhat is the decision rule for selling a product as is or processing it further?arrow_forward
- A 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_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_forwardCalculate the lowest acceptable transfer price for the seller (Division A) ?arrow_forward
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