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Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $93,000 per
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $93,000 per quarter. The company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Quarterly Selling Price Output Product 3 per pound 18,000 pounds 4 per pound 23,000 pounds 7,000 gallons 9 per gallon Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter and unit selling prices after further processing are given below: Additional Product Processing Costs Selling Price 40,000 5 per pound 36,000 7 per pound 12,000 11 per gallon Required: a. Compute the incremental profit (loss) for each product Product A Product B Product C Selling price after further processing Selling price at the split-off point Incremental revenue per pound or gallon Total quarterly output in pounds or gallons Total incremental revenue Total incremental processing costs Total incremental profit or loss
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