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Dock Corporation makes two products from a common input. Joint processing costs up to the split-off point total $33,600 a year. The company allocates these
Dock Corporation makes two products from a common input. Joint processing costs up to the split-off point total $33,600 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 | $ 16,800 | $ 16,800 | $ 33,600 |
Sales value at split-off point | $ 24,000 | $ 24,000 | $ 48,000 |
Costs of further processing | $ 15,000 | $ 18,700 | $ 33,700 |
Sales value after further processing | $ 35,500 | $ 45,100 | $ 80,600 |
What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?
$16,800 | ||
$35,500 | ||
$20,500 | ||
$31,800 |
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