Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $385.000 per quarter. For financial reporting purposes, the company allocates these costs to the jolnt products or the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off polnt are as follows: Selling Peice $27.00 per pound $ 21.00 per pound $33.00 per gallon Quarterly Output 14,400 pounds 22, 400 pounds 5,600 gallons Product C. 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 glven below: Additional Product Processing Costs $ 89, 220 $129, 170 $60,160 Selling Price $32.80 per pound $27.80 per pound $41.80 per gallon 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?

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $385.000 per quarter. For financial reporting purposes, the company allocates these costs to the jolnt products or the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off polnt are as follows: Selling Peice $27.00 per pound $ 21.00 per pound $33.00 per gallon Quarterly Output 14,400 pounds 22, 400 pounds 5,600 gallons Product C. 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 glven below: Additional Product Processing Costs $ 89, 220 $129, 170 $60,160 Selling Price $32.80 per pound $27.80 per pound $41.80 per gallon 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?

Essentials Of Business Analytics

1st Edition

ISBN:9781285187273

Author:Camm, Jeff.

Publisher:Camm, Jeff.

Chapter11: Monte Carlo Simulation

Section: Chapter Questions

Problem 2P

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Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $340,000 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: Product Selling Price A B C Product A $18.00 per pound. $ 12.00 per pound $24.00 per gallon 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: B C Additional Processing Costs $ 66,090 $ 94,655 $ 39,460 Quarterly Output 12,600 pounds 19,700 pounds 3,800 gallons Selling Price $ 22.90 per pound $17.90 per pound $31.90 per gallon Required: 1. What is the financial advantage (disadvantage) of further processing each…
Required 1: Financial advantaged (disadvantage) of further processing-Product A: ? Product B: ? Product C: ? Required 2: Sell at split-off point?-Product A: ? Product B: ? Product C: ? Process further?-Product A: ? Product B: ? Product C: ?
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