Iaukea Company makes two products from a common input. Joint processing costs up
ID: 2752508 • Letter: I
Question
Iaukea Company makes two products from a common input. Joint processing costs up to the split-off point total $47,700 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below:
Required:
What is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point? (Input the amount as a positive value. Omit the "$" sign in your response.)
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 "$" sign in your response.)
What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point? (Omit the "$" sign in your response.)
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.)
Iaukea Company makes two products from a common input. Joint processing costs up to the split-off point total $47,700 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 $ 18,600 $ 29,100 $ 47,700 Sales value at split-off point $ 25,750 $ 37,700 $ 63,450 Costs of further processing $ 23,100 $ 17,400 $ 40,500 Sales value after further processing $ 48,400 $ 56,100 $ 104,500Required:
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 $ 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 $ 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. Net monetary advantage of further processing the Product X = (48400 - 25750) - 23100 = -$450 (Loss)
b. Net monetary advantage of further processing the Product Y = (56100 - 37700) - 17400 = $1,000 (Profit)
c. Minimum amount to be charge for X if it is sold at split-off point = Allocated joint processing costs = $18,600
d. Minimum amount to be charge for Y if it is sold at split-off point = Allocated joint processing costs = $29,100
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