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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 $345,000 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 $345,000 per quarter. For financial reporting purposes, the company allocates these costs to thejoint products on the basis of their relative sales value at the splitoff point. Unit selling prices and total output at the splitoff point are as follows: Quarterly Product Selling Price Output $ 19.96 per pound 12:866 pounds E $ 13.96 per pound 291666 pounds C $ 25.96 per gallon 4:666 gallons ' Each product can be processed further after the splitoff point. Additional processing requires no special facilities. The additional processing costs {per quarter) and unit selling prices after further processing are given below: Additional Selling Product Processing Costs Price $681566 $24.66 per pound B $981256 $19.66 per pound C $411666 $33.66 per gallon Required: 1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the splitoff point? 2. Based on your analysis in requirement 1, which product or products should be sold at the splitoff point and which product or products should be processed further
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