Which product or products should be sold at the split-off

Assignment Help Managerial Accounting

Reference no: EM133342187

Case: Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $310,000 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	Quarterly Output
A	$12.00	per pound	11,400	pounds
B	$6.00	per pound	17,900	pounds
C	$18.00	per gallon	2,600	gallons

Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below:

Product	Additional Processing Costs	Selling Price
A	$52,470	$16.30	per pound
B	$74,345	$11.30	per pound
C	$27,460	$25.30	per gallon

Required:

Question 1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point?

Question 2. Based on your analysis in requirement 1, which product or products should be sold at the split-off point and which product or products should be processed further?

Reference no: EM133342187

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