Larson Company makes two products from a common input. Joint processing costs up
ID: 2476681 • Letter: L
Question
Larson Company makes two products from a common input. Joint processing costs up to the split-off point total $47,800 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below Required: a. What is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point? b. What is the net monetary advantage (disadvantage) of processing Product Y beyond the split-off point?Explanation / Answer
Answer a. Product X Net Income before Processing beyond the split of Point = $33700 - 23900 = $9800 Net Income Processing beyond the split of Point = $53500 -21000 - 23900 = $8600 Net Monetary Advantage (Disadvantage) = $8600 - $9800 = ($1200) Answer b. Product Y Net Income before Processing beyond the split of Point = $33700 - 23900 = $9800 Net Income Processing beyond the split of Point = $60600 -21200 - 23900 = $15500 Net Monetary Advantage (Disadvantage) = $15500 - $9800 = $5700
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