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 $365,000 per quarter. For financial reporting purposes, 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 $ 23.00 per pound $ 17.00 per pound $ 29.00 per gallon Quarterly Output 13,600 pounds 21,200 pounds 4,800 gallons B с Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional E processing costs (per quarter) and unit selling prices after further processing are given below: Additional Product Processing Costs $ 78,540 $113,230 $ 50,560 Selling Price $28.40 per pound $23.40 per pound $37.40 per gallon

Answer 1

1) Incremental analysis

	A	B	C
Selling price after further processing	28.40	23.40	37.40
Selling price at split off	23	17	29
Incremental price	5.40	6.40	8.40
Quantity	13600	21200	4800
Incremental revenue	73440	135680	40320
Incremental cost	78540	113230	50560
Financial advantage(disadvantage)	-5100	22450	-10240

Analysis

	A	B	C
Sell at split off	Yes	No	Yes
Sell after further processing	No	Yes	No