Iacollia Company makes two products from a common input. Joint processing costs

Question

Iacollia Company makes two products from a common input. Joint processing costs up to the split-off point total $47,300 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 $ 23,650 $ 23,650 $ 47,300
Sales value at split-off point $ 34,000 $ 34,000 $ 68,000
Costs of further processing $ 21,600 $ 21,300 $ 42,900
Sales value after further processing $ 53,500 $ 60,300 $ 113,800
Required:
a.
What is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point? (Input the amount as positive value. Omit the "$" sign in your response.)

Net advantage (disadvantage) $
b.
What is the net monetary advantage (disadvantage) of processing Product Y beyond the split-off point? (Input the amount as positive value. Omit the "$" sign in your response.)

Net advantage (disadvantage) $

Explanation / Answer

a $87,000 b) $26,000

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