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 $93,000 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 18,000 pounds 23,000 pounds 7,000 gallons Product Selling Price $ 3 per pound $ 4 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: Additional Processing Costs $ 43,000 $ 37,000 $ 10,000 Product Selling Price $ 4 per pound $ 7 per pound $ 11 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

Explanation / Answer

Incremental analysis :

Product A Product B Product C Selling price after further processing 4 7 11 Selling price at the split off point 3 4 9 Incremental revenue per pound or gallon 1 3 2 Total quarterly output in pounds or gallons 18000 23000 7000 Total incremental revenue 18000 69000 14000 Total incremental processing costs 43000 37000 10000 Total incremental profit or loss -25000 32000 4000

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

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