Question
29)Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $47,000 a year. The company allocates these
29)Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $47,000 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:
Product X. Product Y Total
Allocated joint processing costs. $18,800 $28,200 $47,000
Sales value at split-off point. $20,000 $30,000 $50,000
Costs of further processing. $24,500 $18,800 $43,300
Sales value after further processing $38,400 $58,900 $97,300
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 accept for Product X if it is to be sold at the split-off point?
d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?
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