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 $45,000 a year.

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Answer 1

Answer #1


a)	Financial advantage (disadvantage) of processing Product X beyond the split-off

	= (sale value after further processing - sale value at the split-off point ) - Further processing cost

	=($37600-20000) -$24100

	=-6500	(disadvantage)


b)	Financial advantage (disadvantage) of processing Product Y beyond the split-off

	= (sale value after further processing - sale value at split-off point ) - Further processing cost

	=($58100-30000) -$18400

	=$9700	Advantage


c)	Minimum Amount of company should accept for product X at the split-off point


	sale value after further processing		$ 37,600
	less: cost of further processing		$ 24,100
	minimum selling price at split-off		$ 13,500


d)	Minimum Amount company should accept for product Y at the split-off point

	sale value after further processing		$ 58,100
	less: cost of further processing		$ 18,400
	minimum selling price at split-off		$ 39,700

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Answer 2

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