Reference no: EM132954597

Icy Company makes two products from a common input. Joint processing costs up to the split-off point total $42,000 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........$22,400....................$19,600......................$42,000
Sales value at split-off joint................$32,000....................$28,000......................$60,000
Costs of further processing................$11,600....................$25,300......................$36,900
Sales value after further processing...$40,800..................$54,200........................$95,000

Required:

Problem a) What is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point?

Problem b) What is the net monetary advantage (disadvantage) of processing Product Y beyond the split-off point?

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

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