Reference no: EM132526528

Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $47,500 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               $28,500                $19,000                     $47,500

Sales value at split-off point                     $30,000              $20,000                     $50,000

Costs of further processing                         $24,600               $18,900                    $43,500

Sales value after further processing                $48,600                $59,100                    $107,700

Required:

Question a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? (Negative amount should be indicated by a minus sign.)

Question b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point?

Question c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?

Question d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?