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Chrome File Edit View History Bookmarks People Window Help D " Sun 2:05 PM Q = O O B Garrison CH 12 Exercises x CO ezto.mheducation.comhm.tpx * D o value 4.28 points Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $97,000 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: Product Selling Price S 3 per pound s 4 per pound S 16 per gallon Quarterly Output 16000 pounds 21,000 pounds 4,000 gallons Each product can be processed further after the split-off pointAdditional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below: Product Additional Costs Selling Price $ 37,000 $5 per pound $ 38,000 $7 per pound 1,000 $ 21 per gallon Required a Compute the incremental profit (loss) for each product. Product A Product B Product C Soiling price after further processing Selling price at the split-off point Incremental revenue per pound or gallon o o o Total quarterly output in pounds or gallons Total incremental revenue o o o Total incremental processing costs N D Total incremental profit or loss SO SO SO Og 51E S SP® a 1 0 0 AM P) CHILLEL IT

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Product A Product B Product C Selling price after further processing 5 7 21 Selling price at the split-off point 3 4 16 Incremental revenue per pound or gallon 2 3 5 Total quarterly output in pounds or gallons 16000 21000 4000 Total incremental revenue 32000 63000 20000 Total incremental processing costs 37000 38000 11000 Total incremental profit or loss -5000 25000 9000 b Product A should be sold at split off point c Product B and C should be processed further

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