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Adelphi Company makes two products from a common, joint input. Joint processing costs up to the split-off point (where the two separate products emerge) total

Adelphi Company makes two products from a common, joint input. Joint processing costs up to the split-off point (where the two separate products emerge) total $42,000 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

$22,400

$19,600

$42,000

Sales value at split-off point

$32,000

$28,000

$60,000

Costs of further processing

$11,600

$25,300

$36,900

Sales value after further processing

$40,800

$54,200

$95,000

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

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

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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