Business, 05.12.2019 07:31 lame3245

Dorsey company manufactures three products from a common input in a joint processing operation. joint processing costs up to the split-off point total $350,000 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 $ 16 per pound 15,000 pounds
b $ 8 per pound 20,000 pounds
c $ 25 per gallon 4,000 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 $ 63,000 $ 20 per pound
b $ 80,000 $ 13 per pound
c $ 36,000 $ 32 per gallon

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

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