Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $320,000 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 Selling Price Quarterly

Output

A $ 14.00 per pound 11,800 pounds

B $ 8.00 per pound 18,500 pounds

C $ 20.00 per gallon 3,000 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:

Product Additional

Processing Costs Selling

Price

A $ 56,850 $ 18.50 per pound

B $ 80,875 $ 13.50 per pound

C $ 31,300 $ 27.50 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?