Dorsey Company manufactures three products from a common input in a joint proces

Question

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $92,000 per quarter. 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:

     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:

6

Compute the incremental profit (loss) for each product.

Which product or products should be sold at the split-off point? (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.)

Which product or products should be processed further? (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.)

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $92,000 per quarter. 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:

Explanation / Answer

Dorsey Company Joint Costs at Split Off Point per Qtr        92,000 Incremental Profitability   Product Selling Price at Split Off $ per lb Quarterly Outout lb quarterly Sales value $ Allocation % of Joint cost on sales value Allocation of Joint cost at Split Off per qtr Total Profit at Split Off point $ Additional Processing Cost after split off per Qtr Total Processing Cost Unit selling price $ per lb after further processing Total Sales Value after further processing $ Profit at further processing Incremental Profit/(loss) at further processing A                       4         15,000        60,000 26.79% 24,642.86       35,357      37,000 61,642.9                 6       90,000    28,357.1      (7,000) B                       5         20,000      100,000 44.64% 41,071.43       58,929      38,000 79,071.4                 8    160,000    80,928.6      22,000 C                       8           8,000        64,000 28.57% 26,285.71       37,714      10,000 36,285.7              10       80,000    43,714.3         6,000 Total      224,000         92,000     132,000      85,000     177,000    330,000     153,000      21,000 Product Incremental Profit/(loss) at further processing Shoul be processded further ? A            (7,000) No B            22,000 Yes C               6,000 Yes Total            21,000

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