Question
Dowchow Corporation makes two products from a common input. Joint processing costs up to the split-off point total $38,400 a year. The company allocates these
Dowchow Corporation makes two products from a common input. Joint processing costs up to the split-off point total $38,400 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below: Product X Product Y Total Allocated joint processing costs $20,800 $17,600 $38,400 Sales value at split-off point $26,000 $22,000 $48,000 Costs of further processing $22,600 $20,400 $43,000 ales value after further processing $45,000 $45,900 $90,900 What is the net monetary advantage (disadvantage) of processing Product Y beyond the split-off point?
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