Dorsey Company manufactures three products from a common input in a joint proces

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 $94,000 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: Compute the incremental profit (loss) for each product. 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.) Product A Product B Product C 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.) Product A Product B Product C

Explanation / Answer

ans a Product A Product B Product C Selling price after further processing 4 7 13 Selling Price at split off point 3 4 10 Incremental revellonnue per pound or gallon 1 3 3 Total qty output in pounds/gallons 19000 24000 6000 Total incremental Revenue 19000 72000 18000 Total incremental processing cost 37000 39000 11000 Total incremental profit or (loss) -$18000 $33000 $7000 Ans b Product A should be sold at spilt off point as it will incurr loss if further processed Anc C product B and C should be further processed as it generates profit

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