Chapter $13$ Exercises i

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split$-$off point total $$380,000$ per quarter. For financial reporting purposes, the company allocates these costs to the joint products based on their relative sales value at the split$-$off point. Unit selling prices and total output at the split$-$off point are as follows:

$\backslash$table$[[$Product$,$Selling Price,Quarterly output$],[$A$,$$$26\mathrm{.}00$ per pound,$14,200$ pounds$],[$B$,$$$20\mathrm{.}00$ per pound,$22,100$ pounds$],[$C$,$$$32\mathrm{.}00$ per gatlon,$5,400$ gallons$]]$

Each product can be processed further after the split$-$off point. Additional processing requires no special facilities. The additional processing costs $($per quartet$)$ and unit selling prices after further processing are given below:

$\backslash$table$[[,\backslash$table$[[$Additional$],[$Processing$],[$Costs$]],],[$Product$,$Selling Price,$],[$A$,$$$86,490,$$$31\mathrm{.}70$ per pound$],[$B$,$$$125,095,$$$26\mathrm{.}70$ per pound$],[$C$,$$$57,700,$$$40\mathrm{.}70$ per gallon$]]$

Required:

What is the financial advantage $($disadvantage$)$ of further processing each of the three products beyond the split$-$off point?

Based on your analysis in requirement $1,$ which product or products should be sold at the split$-$off point and which should be processed further?

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Required $2$

What is the financial advantage $($disadvantage$)$ of further processing each of the three products beyond the split$-$off point? Note: Do not round your intermediate calculations. Enter "disadvantages" as a negative value.

Financial advantage $($disadvantage$)$ of further processing