Exercise $6-7($Algo$)$ Sell or Process Further Decisions $[$LO$6-7]$

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the

split$-$off point total $$345,000$ 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:

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:

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 product or

products should be processed further?

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