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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 $350,000 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 $350,000 per quarter. 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 A Product B Product c Selling Price $ 16 per kg $ 8 per kg $ 25 per litre Quarterly Output 15,000 kg 20,000 kg 4,000 litres 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 A Product B Product C Additional Processing Costs $63,000 $80,000 $36,000 Selling Price $ 20 per kg $ 13 per kg $ 32 per litre Required: a. Compute the incremental profit (loss) for each product. Product A Product B Product C Selling price after further processing Selling price at the split-off point Incremental revenue per kg or gallon Total quarterly output in kgs or gallons Total incremental revenue Total incremental processing costs Total incremental profit or loss b. Which product or products should be sold at the split-off point? (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.) Product A ? Product B ? Product C c. Which product or products should be processed further? (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.) ? Product A ? Product B 1 Product C
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