Question
Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $42,500 a year. The company allocates these
Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $42,500 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 | $ 17,000 | $ 25,500 | $ 42,500 |
Sales value at split-off point | $ 20,000 | $ 30,000 | $ 50,000 |
Costs of further processing | $ 22,900 | $ 17,200 | $ 40,100 |
Sales value after further processing | $ 38,000 | $ 55,700 | $ 93,700 |
Required:
a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? (Negative amount should be indicated by a minus sign.)
b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point?
c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?
d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?
Required: a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? (Negative amount should be indicated by a minus sign.) b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point? c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point? d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point? Required: a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? (Negative amount should be indicated by a minus sign.) b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point? c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point? d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off pointStep by Step Solution
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