13-16. Sell-as-is or Process Further. Odette Company makes two products from a common input. Joint processing costs up to the split-off point total P64,800 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:

...............................................................................Product X.....................Product Y...................Total

Allocated joint processing costs........... P32,400.......................P32,400..................P64,800

Sales value at split-off point.................. P36,000.........................P36,000..................P72,000

Costs of further processing ...................P20,300........................P14,300....................P34,600

Sales value after further processing.....P55,400.......................P53,000...................P108,400

Required:

13. What is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point?

14. What is the net monetary advantage (disadvantage) of processing Product Y beyond the split-off point?

15. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?

16. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?

17-18) Dropping a Product Line. Lou Yi Company manufactures and sells Product K. Results for last year are as follows:

Sales (10,000 units at P150 each) .....................................P1,500,000

Less expenses:

Variable production costs........................... P900,000

Sales commissions (15% of sales)........... 225,000

Salary of product line manager................. 190,000

Traceable fixed advertising expense...... 175,000

Fixed manufacturing overhead.................. 160,000

Total expenses ............................................................................1,650,000

Net operating loss.....................................................................P (150,000)

Lou Yi is reexamining all of its product lines and is trying to decide whether to discontinue Product K. Dropping the product would have no effect on the total fixed manufacturing overhead incurred by the company.

17. Assume that dropping Product K will have no effect on the sale of other product lines. If the company drops Product K, the change in annual net operating income due to this decision will be a:

18. Assume that dropping Product K would result in a P15,000 increase in the contribution margin of other product lines. If Bayshore chooses to drop Product K, then the change in net operating income next year due to this action will be a:

9-12) Optimization of ScarceResource.The Kadita Company produces three products with the following costs and selling prices:

.........................................................................Product A..............Product B.................Product C

Selling price per unit ..................................P15..........................P20...............................P20

Variable cost per unit..................................P8............................P10...............................P12

Direct labor hours per unit..........................1...............................1.5.....................................2

Machine hours per unit..............................3.5..............................2....................................2.5

9. If Madison has a limit of 10,000 direct labor hours but no limit on machine hours, then the three products should be produced in the order:

10. What would be the total contribution margin if we follow the answer in number 9.

11. If Madison has a limit of 15,000 machine hours but no limit on direct labor hours, then the three products should be produced in the order:

12. What would be the total contribution margin if we follow the answer in number 11.