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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 $92,000 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 $92,000 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: Selling Price $ 4 per pound $ 5 per pound $ 9 per gallon Product Quarterly Output 13,000 pounds 18,000 pounds 7,000 gallons 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 Processing Costs $42,000 $37,000 $11,750 Product Selling Price $ 6 per pound $ 9 per pound $ 11 per gallon Required a. Compute the incremental profit (loss) for each product. Product A Product B Product C Selling price after further 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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