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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 $300,000 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 $300,000 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: Product A B Selling Price $10.00 per pound $ 4.00 per pound $ 16.00 per gallon Quarterly Output 11,000 pounds 17,300 pounds. 2,200 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 ces Product A $ 48,250 B $ 68,055 C $ 23,780 Required: Selling Price $ 14.10 per pound $ 9.10 per pound $ 23.10 per gallon 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 21 What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? (Enter "disadvantages" as a negative value.) Financial advantage (disadvantage) of further processing Required 1 Product A Product B Product C Required 2 > Required 1 Required 2 in the tabs below. 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? Sell at split-off point? Process further? Product A Product B Product C
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