Dorsey Company manufactures three products from a common inputin a joint processing operation. Joint processing costs up to thesplit-off point total $97,000 per quarter. The company allocatesthese costs to the joint products on the basis of their relativesales value at the split-off point. Unit selling prices and totaloutput at the split-off point are as follows:
Product Selling Price Quarterly
Output A $ 5 per pound 11,000 pounds B $ 6 per pound 16,000 pounds C $ 12 per gallon 5,000 gallons
Each product can be processedfurther after the split-off point. Additional processing requiresno special facilities. The additional processing costs (perquarter) and unit selling prices after further processing are givenbelow:
Product Additional
Processing Costs Selling Price A $ 39,000 $ 7
per pound B $ 40,000 $ 10 per pound C $ 9,000 $ 15 per gallon
Required: a. Compute the incremental profit (loss) for each product.
b. Which product or products should be sold at the split-off point?(You may select more than one answer. Single click the boxwith a check mark for correct answers and double click to empty thebox for the wrong answers.)
Product A Product B Product C
c. Which product or products should be processed further?(You may select more than one answer. Single click the boxwith a check mark for correct answers and double click to empty thebox for the wrong answers.)
Product A Product B Product C
Dorsey Company manufactures three products from a common inputin a joint processing operation. Joint processing costs up to thesplit-off point total $97,000 per quarter. The company allocatesthese costs to the joint products on the basis of their relativesales value at the split-off point. Unit selling prices and totaloutput at the split-off point are as follows: |
| Product | Selling Price | Quarterly Output | ||||
| A | $ | 5 | per pound | 11,000 | pounds | |
| B | $ | 6 | per pound | 16,000 | pounds | |
| C | $ | 12 | per gallon | 5,000 | gallons | |
Each product can be processedfurther after the split-off point. Additional processing requiresno special facilities. The additional processing costs (perquarter) and unit selling prices after further processing are givenbelow: |
| Product | Additional Processing Costs | Selling Price | ||||
| A | $ | 39,000 | $ | 7 | per pound | |
| B | $ | 40,000 | $ | 10 | per pound | |
| C | $ | 9,000 | $ | 15 | per gallon | |
| Required: | |
| a. | Compute the incremental profit (loss) for each product. |
| b. | Which product or products should be sold at the split-off point?(You may select more than one answer. Single click the boxwith a check mark for correct answers and double click to empty thebox for the wrong answers.) | ||||||
|
| c. | Which product or products should be processed further?(You may select more than one answer. Single click the boxwith a check mark for correct answers and double click to empty thebox for the wrong answers.) | ||||||
|
Related questions
Dorsey Company manufactures three products from a common inputin a joint processing operation. Joint processing costs up to thesplit-off point total $91,000 per quarter. The company allocatesthese costs to the joint products on the basis of their relativesales value at the split-off point. Unit selling prices and totaloutput at the split-off point are as follows:
| Product | Selling Price | Quarterly Output |
| A | $3 per pound | 19,000 pounds |
| B | $4 per pound | 24,000 pounds |
| C | $11 per gallon | 6,000 gallons |
Each product can be processed further after thesplit-off point. Additional processing requires no specialfacilities. The additional processing costs (per quarter) and unitselling prices after further processing are given below:
| Product | Additional Processing Costs | Selling Price |
| A | $40,000 | $4 per pound |
| B | $38,000 | $7 per pound |
| C | $14,250 | $14 per gallon |
Required:
Compute the incremental profit (loss) for each product.
Product A | Product B | Product C | |
Selling price after further processing | |||
Selling price at the split-off point | |||
Incremental revenue per pound or gallon | |||
Total quarterly output in pounds or gallons | |||
Total incremental revenue | |||
Total incremental processing costs | |||
Total incremental profit or loss |
Which product or products should be sold at the split-offpoint?
Product A
Product B
Product C
Which product or products should be processed further? (You mayselect more than one answer.
Product A
Product B
Product C
Dorsey Company manufactures three products from a common input in ajoint processing operation. Joint processing costs up to thesplit-off point total $335,000 per quarter. The company allocatesthese costs to the joint products on the basis of their relativesales value at the split-off point. Unit selling prices and totaloutput at the split-off point are as follows: |
| Product | Selling Price | Quarterly Output |
| A | $17 per pound | 13,900 pounds |
| B | $7 per pound | 19,500 pounds |
| C | $27 per gallon | 2,200 gallons |
Each product can be processed further after the split-off point.Additional processing requires no special facilities. Theadditional processing costs (per quarter) and unit selling pricesafter further processing are given below: |
| Product | Additional Processing Costs | Selling Price |
| A | $64,300 | $19 per pound |
| B | $82,000 | $14 per pound |
| C | $36,700 | $31 per gallon |
| Required: | |
| (a) | Compute the incremental profit (loss) for each product. (Negative amounts should be indicated by a minus sign. Omit the "$"sign in your response.) |
| Product A | Product B | Product C | |
| Incremental profit (loss) | $ | $ | $ |
| (b) |
| Which product or products be sold at the split-off point? (Select all that apply.) |
| Product A | |
| Product B | |
| Product C |
