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Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the splitoff 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 splitoff point total $300,000 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: Product Selling Price Quarterly Uutput A $ 18.88 per pound 11,888 pounds B E. 4.88 per pound 1?,388 pounds C $ 16.88 per gallon 2,288 gallons Each product can be processed further alter the splitoff point. Additional processing requires no special facilities. The additional processing costs [per quarter) and unit selling prices alter further processing are given below: Additional Processing Product Costs Selling Price A $ 48,258 $ 14.18 per pound E $ 68,855 $ 9.18 per pound C 3L 23,788 $ 23.18 per gallon Required: 1. What is the financial advantage (disadvantage) of further processing each ofthe 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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