Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total of $315,000 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 $ 13.00 per pound $ 7.00 per pound $ 19.00 per gallon Quarterly Output 11,600 pounds 18,200 pounds 2,800 gallons C 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: Product Additional Processing Costs $54,640 $77,580 $29, 360 Selling Price $17.40 per pound $12.40 per pound $26.40 per gallon Required 1 Required 2 What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? (Enter “disadvantages” as a negative value.)
Product A Product B Product C Financial advantage (disadvantage) of further processing Required 1 Required 2 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? Product A Product B Product C Sell at the split-off point? Process further?
Dorsey Company Manufactures Assignment