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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 $310,000
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $310,000 per quarter. For financial reporting purposes, 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 $ 12.00 per pound Product Quarterly Output A 11,400 pounds B $ 6.00 per pound 17,900 pounds $ 18.00 per gallon 2,600 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 $ 52,470 $ 74,345 Product A B $ 27,460 Selling Price $ 16.30 per pound $ 11.30 per pound $ 25.30 per gallon Required: 1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? 2. Based on your analysis in requirement 1, which product or products should be sold at the split-off point and which product or products should be processed further? Required 1 Required 2 What is the financial advantage (disadvantage) of further processing each of the three products beyond the (Do not round your intermediate calculations. Enter "disadvantages" as a negative value.) Financial advantage (disadvantage) of further processing Product A Product B Product C Required 1 Required 2 Based on your analysis in requirement 1, which product or products should be sold at the split-off point and products should be processed further? Sell at split-off point? Process further? Product A Product B Product C
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