Assume a company has three products-A, B, and C-that emerge from a joint process. The joint processing costs that are incurred up to the split-off point equal $1,300,000. The selling prices and outputs for each product at the split-off point are as follows: Product Selling Price A $ 33 per pound $ 29 per pound Output 14,000 pounds 18,000 pounds B с $24 per pound 19,000 pounds Each product can be processed further beyond the split-off point. The additional processing costs for each product and their respective selling prices after further processing are as follows: Product Additional Processing Costs с с Selling Price $37 per pound $72,000 $34 per pound $ 88,000 $ 30 per pound A $ 65,000 B The company is trying to decide whether to retain or discontinue the entire joint manufacturing process. What is the financial advantage (disadvantage) of continuing to operate the entire joint manufacturing process?

Assume a company has three products-A, B, and C-that emerge from a joint process. The joint processing costs that are incurred up to the split-off point equal $1,300,000. The selling prices and outputs for each product at the split-off point are as follows: Product Selling Price A $ 33 per pound $ 29 per pound Output 14,000 pounds 18,000 pounds B с $24 per pound 19,000 pounds Each product can be processed further beyond the split-off point. The additional processing costs for each product and their respective selling prices after further processing are as follows: Product Additional Processing Costs с с Selling Price $37 per pound $72,000 $34 per pound $ 88,000 $ 30 per pound A $ 65,000 B The company is trying to decide whether to retain or discontinue the entire joint manufacturing process. What is the financial advantage (disadvantage) of continuing to operate the entire joint manufacturing process?

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter6: Process Cost Accounting—additional Procedures; Accounting For Joint Products And By-products

Section: Chapter Questions

Problem 14E: LeMoyne Manufacturing Inc.’s joint cost of producing 2,000 units of Product X, 1,000 units of...

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Oakes Inc. manufactured 40,000 gallons of Mononate and 60,000 gallons of Beracyl in a joint production process, incurring 250,000 of joint costs. Oakes allocates joint costs based on the physical volume of each product produced. Mononate and Beracyl can each be sold at the split-off point in a semifinished state or, alternatively, processed further. Additional data about the two products are as follows: An assistant in the companys cost accounting department was overheard saying ...that when both joint and separable costs are considered, the firm has no business processing either product beyond the split-off point. The extra revenue is simply not worth the effort. Which of the following strategies should be recommended for Oakes?
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Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $51,000 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: Allocated joint processing costs Sales value at split-off point Costs of further processing Sales value after further processing Product X $ 20,400 $ 20,000 $ 23,300 $ 38,800 > Answer is complete but not entirely correct. a. Financial disadvantage b. Financial advantage c. Minimum acceptable amount d. Minimum acceptable amount Required: a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? (Negative amount should be indicated by a minus sign.) b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point? c. What is the minimum amount the company should…
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