Question
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $92,000 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 $92,000 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 | Selling Price | Quarterly Output | ||||
A | $ | 3 | per pound | 16,000 | pounds | |
B | $ | 5 | per pound | 21,000 | pounds | |
C | $ | 10 | per gallon | 6,000 | 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 | $ | 38,000 | $ | 5 | per pound |
B | $ | 40,000 | $ | 8 | per pound |
C | $ | 11,000 | $ | 14 | per gallon |
|
Required
a. Compute the incremental profit (loss) for each product.
Got lost half way Help & explain your steps please! Required: a. Compute the incremental profit (oss) for each product. Product A Product B Product C Selling price after further processing 5 8 14 Selling price at the split-off point 3 5 10 2 3 4 Incremental revenue per pound or gallon Total quarterly output in pounds or gallons Total incremental revenue 0 0 0 Total incremental processing costs s 0 S 0 S 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 wi 2 Product A 2 Product B 2 Product c c. Which product or products should be processed further? (You may select more than one answer. Single click the box with a ch 2 Product A 2 Product B 2 Product C
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