Exercise $13-7($Algo$)$ Sell or Process Further Decisions $[$LO$13-7]$

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split$-$off point total $$365,000$ per quarter. For financial reporting purposes, the company allocates these costs to the joint products based on their relative sales value at the split$-$off point. Unit selling prices and total output at the split$-$off point are as follows:

$\backslash$table$[[$Product$,$Selling Price,Quarterly output$],[$A$,$$$23\mathrm{.}00$ per pound,$13,600$ pounds$],[$B$,$$$17\mathrm{.}00$ per pound,$21,200$ pounds$],[$C$,$$$29\mathrm{.}00$ per gallon,$4,800$ 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:

$\backslash$table$[[,\backslash$table$[[$Additional$],[$Processing$],[$Costs$]],],[$Product$,$$$78,540,$Selling Price$],[$A$,$$$28\mathrm{.}40$ per pound,$],[$B$,$$$113,230,$$$23\mathrm{.}40$ per pound$],[$C$,$$$50,560,$$$37\mathrm{.}40$ per gallon$]]$

Required:

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

Based on your analysis in requirement $1,$ which product or products should be sold at the split$-$off point and which should be processed further?

Complete this question by entering your answers in the tabs below.