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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 $360,000 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 $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:

Product Selling Price Quarterly Output
A $ 22.00 per pound 13,400 pounds
B $ 16.00 per pound 20,900 pounds
C $ 28.00 per gallon 4,600 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 $ 75,970 $ 27.30 per pound
B $ 109,395 $ 22.30 per pound
C $ 48,260 $ 36.30 per gallon

Required:

1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point?

What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point?

Product A Product B Product C
Financial advantage (disadvantage) of further processing

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?

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?

Product A Product B Product C
Sell at split-off point?
Process further?

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