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: Product Selling Price Quarterly Output A $ 3 per pound 16,000 pounds B $ 4 per pound 21,000 pounds C $ 13 per gallon 5,000 gallons 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: Product Additional Processing Costs Selling Price A $ 44,000 $ 5 per pound B $ 36,000 $ 8 per pound C $ 11,750 $ 16 per gallon
T-Mobile Wi-Fi 7:19 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 $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-ff point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below a. Compute the incremental profit (loss) for each product b. 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.) C. 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.) Product Rederences o& Resources

Explanation / Answer

Incremental analysis :

b) Product A should be sold at split off point

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

Product A Product B Product C Sale price after further processing 5 8 16 Sale at split off point 3 4 13 Incremental sale price 2 4 3 Quantity 16000 21000 5000 Incremental revenue 32000 84000 15000 Incremental cost 44000 36000 11750 Incremental profit (loss) (12000) 48000 3250

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