Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $360,000 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:

ProductSelling PriceQuarterly

OutputA$22.00per pound13,400poundsB$16.00per pound20,900poundsC$28.00per gallon4,600gallons

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:

ProductAdditional

Processing CostsSelling

PriceA$75,970$27.30per poundB$109,395$22.30per poundC$48,260$36.30per 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?