Iaukea Company makes two products from a common input. Joint processing costs up
ID: 2489891 • Letter: I
Question
Iaukea Company makes two products from a common input. Joint processing costs up to the split-off point total $49,700 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 $ 19,300 $ 30,400 $ 49,700 Sales value at split-off point $ 24,050 $ 38,050 $ 62,100 Costs of further processing $ 23,800 $ 18,100 $ 41,900 Sales value after further processing $ 47,000 $ 57,500 $ 104,500 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 $ 22950 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 $ -23800 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 $
Explanation / Answer
a.
Product X
Sales value after further processing
$ 47,000
Sales value at split-off point
$ 24,050
Incremental revenue for processing beyond split-off point
$ 22,950
Costs of further processing
$ 23,800
Net advantage/(disadvantage) for processing beyond split-off point
$ -850
b.
Product Y
Sales value after further processing
$ 57,500
Sales value at split-off point
$ 38,050
Incremental revenue for processing beyond split-off point
$ 19,450
Costs of further processing
$ 18,100
Net advantage/(disadvantage) for processing beyond split-off point
$ 1,350
c.
Product X
Sales value after further processing
$ 47,000
Costs of further processing
$ 23,800
Profit from further processing
$ 23,200
The minimum amount the company should accept for Product X if it is to be sold at the split-off point is $23,200.
d.
Product Y
Sales value after further processing
$ 57,500
Costs of further processing
$ 18,100
Profit from further processing
$ 39,400
The minimum amount the company should accept for Product Y if it is to be sold at the split-off point is $39,400.
Product X
Sales value after further processing
$ 47,000
Sales value at split-off point
$ 24,050
Incremental revenue for processing beyond split-off point
$ 22,950
Costs of further processing
$ 23,800
Net advantage/(disadvantage) for processing beyond split-off point
$ -850
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.