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 $99,000 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.

Product Selling Price Quarterly
Output A $ 4 per pound 13,000 pounds B $ 5 per pound 18,000 pounds C $ 13 per gallon 5,000 gallons

Explanation / Answer

Incremental Profit/(Loss) = Additional Revenue - Additional Cost

A = [(6 - 4)*13000] - 35000 = ($9,000) Loss

B = [(9 - 5)*18000] - 35000 = $37,000 Profit

C = [(17 - 13)*5000] - 11000 = $9,000 Profit

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.