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Sell or Process Further Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off
Sell or Process Further Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $375,000 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: Product A B Selling Price $25 per pound $19 per pound $31 per gallon Quarterly Output 14,000 pounds 21,800 pounds 5,200 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: Additional Product Processing Cost A $83,800 B $121,080 $55,280 Selling Price $30.60 per pound $25.60 per pound $39.60 per gallon What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? AND Based on your analysis, 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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