akil AT&T; 3:29 PM ezto.mheducation.com Dorsey Company manufactures three produc

Question

akil AT&T; 3:29 PM ezto.mheducation.com Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $93,000 per quarter. The company allocates these costs to the joint products on the basis of thei 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 Required: 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.) Produt 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

Explanation / Answer

Compute incremental profit of each product :

b) Product A should be sold at split off point.

c) Product B and C should be sold after further processing

Product A Product B Product C Sale price after further processing 4 6 16 Sale price at split off point 3 4 13 Incremental revenue per pound and gallon 1 2 3 Total quantity output in pounds and gallons 20000 25000 5000 Total incremental revenue 20000 50000 15000 Total incremental processing cost (43000) (38000) (11750) Total incremental profit and loss (23000) 12000 3250

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