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 $395,000 per quarter. For financial reporting purposes, 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 Quarterly Output 14,800 pounds 23,000 pounds Product Selling Price $ 29.00 per pound $ 23.00 per pound 35.00 per gallon 6,000 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: Additional Processing Costs $ 94,800 $137,500 Selling Price $35.00 per pound $ 30.00 per pound $44.00 per gallon Product 65,200 Required: 1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? 2. Based on your analysis in requirement 1, which product or products should be sold at the split-off point and which product or products should be processed further? Complete this question by entering your answers in the tabs below.

Explanation / Answer

1 A B C Selling price after further processing 35 30 44 Selling price at the split-off point 29 23 35 Incremental revenue per pound or gallon 6 7 9 Total quarterly output in pounds or gallons 14800 23000 6000 Total incremental revenue 88800 161000 54000 Total incremental processing costs 94800 137500 65200 Financial advantage(disadvantage) -6000 23500 -11200 2 Products A and C should be sold at the split-off point Product B should be processed further

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

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