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 Quarterly Output 13,000 pounds 18,000 pounds 7,000 gallons Product Selling Price $ 4 per pound $ 5 per pound $ 9 per gallon 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 Additionl Processing Costs S 41,000 S 40,000 S 18,750 Product Selling Price $ 6 per pound $ 9 per pound $ 12 per gallon Required a. 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 Total quarterly output in pounds or gallons Total incremental revenue Total incremental processing costs Total incremental profit or loss b. 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 ? 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

a) Incremental analysis :

b) Product A should be sold at split off point

c) Product B and Product C should be sold after further processing

Product A Product B Product C Sale price after further processing 6 9 12 Sales price at split off point 4 5 9 Incremental sales price per pound or gallon 2 4 3 Quantity 13000 18000 7000 Incremental Sales revenue 26000 72000 21000 Incremental cost -41000 40000 18750 Incremental profit (loss) -15000 32000 2250

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.