Dorsey Company manufactures three products from a common input in a joint proces
ID: 2477353 • Letter: D
Question
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $96,000 per quarter. 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:
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:
6
Compute the incremental profit (loss) for each product.
Product A Product B Product C
Selling price after further processing
Selling price at the split-off point
Incremental revenue per pound or gallon 0 0 0
Total quarterly output in pounds or gallons
Total incremental revenue 0 0 0
Total incremental processing costs
Total incremental profit or loss $ 0 $0 $0
Which product or products should be sold at the split-off point? (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.)
Which product or products should be processed further? (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.)
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $96,000 per quarter. 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:
Explanation / Answer
a. Incremental Analysis:
b. Product A should be sold at split-off point.
c. Product B and Product C should be processed further.
Product A B C Quaterly output 15,000 pounds 20,000 pounds 6,000 gallons Selling price after further processing $ 6 per pound $ 8 per pound $ 14 per gallon Sales revenue after further processing $ 90,000 $ 160,000 $ 84,000 Sales revenue at split off point $ 60,000 $ 100,000 $ 60,000 Incremental revenues $ 30,000 $ 60,000 $ 24,000 Incremental processing costs $ 39,000 $ 40,000 $ 11,000 Incremental profit ( loss) $ (9,000) $ 20,000 $ 13,000Related Questions
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