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

Question

Iaukea Company makes two products from a common input. Joint processing costs up to the split-off point total $48,600 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 $ 18,800 $ 29,800 $ 48,600
Sales value at split-off point $ 25,850 $ 37,800 $ 63,650
Costs of further processing $ 23,300 $ 17,600 $ 40,900
Sales value after further processing $ 48,800 $ 56,500 $ 105,300

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

Net $

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

Net $

c.
What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point? (Omit the "$" sign in your response.)

Minimum acceptable amount $

d.
What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point? (Omit the "$" sign in your response.)

Minimum acceptable amount $


My work for A &B

A) 48800-25850= 22950 - 23300 = -350 Disadvantage
B) 56500 - 37800= 18700 - 17600 = 1100
C) My textbook does not help solve this
D)My textbook does not help solve this

Explanation / Answer

Product X Product Y TOTAL

Allocated joint processing costs $ 18,800 $ 29,800 $ 48,600
Sales value at split-off point $ 25,850 $ 37,800 $ 63,650
Costs of further processing $ 23,300 $ 17,600 $ 40,900
Sales value after further processing $ 48,800 $ 56,500 $ 105,300

a. What is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point?

sales after - sales before = sales increase

48,800 - 25,850 = 22950

sales increase - cost after = profit

22950 - 23,300 = -350

b. What is the net monetary advantage (disadvantage) of processing Product Y beyond the split-off point?

same method as above, you get +1100

c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point

split of point value + profit that would be made beyond split off point

25,850 + (-350) = 25500

d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?

same method as above, you get 38900

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