Larsen Company makes two products from a common input. Joint processing costs up
ID: 2458472 • Letter: L
Question
Larsen Company makes two products from a common input. Joint processing costs up to the split-off point total $48,100 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below:
Product X
Product Y
Total
Allocated joint processing costs
24,050
24,050
48,100
Sales value at split-off point
33,700
33,700
67,400
Costs of further processing
21,000
21,700
42,700
Sales value after further processing
53,400
60,200
113,600
What is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point?(Input a net disadvantage as a negative value. Omit the "$" sign in your response.)
b.
What is the net monetary advantage (disadvantage) of processing Product Y beyond the split-off point?(Input a net disadvantage as a negative value. Omit the "$" sign in your response.)
Larsen Company makes two products from a common input. Joint processing costs up to the split-off point total $48,100 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below:
Explanation / Answer
Solution to Requirement (a) (b) Product X ($) Product Y ($) Allocated joint processing costs (A) $24,050 $24,050 Sales value at split-off point (B) 33,700 33,700 Earning at the split-off point (B-A) 9650 9650 Costs of further processing (C) 21,000 21,700 Total cost after the the further (D=A+C) 45050 45750 Sales value after further processing (E) 53,400 60,200 Earning after the futher processing ( E-D) $8350 $14450 RESULT DUE TO REDUCTION IN EARNING ON FURTHER PROCESSING Disadvantage Advantage NET DISADVANTAGE / NET ADVANTAGE (LESS/RISE IN EARNING) ($1300) LESS $4800 RISE
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