Ibsen Company makes two products from a common input. Joint processing costs up to the split-off...

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Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $40,000 a year.

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Answer 1

Answer #1

Incremental analysis
				X	Y
Sales after further processing		47000	54700
Less: Sales at splitt off		30000	20000
Incremental revenue			17000	34700
Less: Incremental cost		22400	16700
Incremental Income			-5400	18000

Financial disadvantage of processing X beyond splitt off	-5400
Financial advantage of processing Y beyond splitt off:		18000
Minimum amount for selling X at splitt off			24600	(47000-22400)
Minimum amount for selling Y at splitt off			38000	(54700-16700)

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Answer 2

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