Question
In: Accounting
Southside Company manufactures three products from a common input in a joint processing operation. What is...
Southside Company manufactures three products from a common input in a joint processing operation. What is the financial advantage (disadvantage) of further processing each of the products beyond the split off point. Round each answer to the nearest whole dollar and include the $ sign and any necessary commas. Only answers in this format will be accepted.
Product Selling Price Annual Output
A $6 / lb 1,000 lbs
B $8 / lb 3,000 lbs
C $5 / gal 2,000 gallons
Further Processing requires no special facilities. Additional costs and selling price are given below:
Product Additional Processing Costs Selling Price
A $13,000 $20 / lb
B $80,000 $13 / lb
C $63,000 $32 / gal
Product A additional CM =
Product A additional cost =
Product A Advantage/Disadvantage =
Product A sell or process further =
Product B additional CM =
Product B additional cost =
Product B Advantage/Disadvantage =
Product B sell or process further =
Product C additional CM =
Product C additional cost =
Product C Advantage/Disadvantage =
Product C sell or process further =
Solutions
Expert Solution
Answer
| Product A additional CM = | $ 14,000 | |
| Product A additional cost = | $ 13,000 | |
| Product A Advantage/Disadvantage = | $ 1,000 | Advantage |
| Product A sell or process further = | Process Further | |
| Product B additional CM = | $ 15,000 | |
| Product B additional cost = | $ 80,000 | |
| Product B Advantage/Disadvantage = | $ (65,000) | Disadvantage |
| Product B sell or process further = | Sell | |
| Product C additional CM = | $ 54,000 | |
| Product C additional cost = | $ 63,000 | |
| Product C Advantage/Disadvantage = | $ (9,000) | Disadvantage |
| Product C sell or process further = | Sell |
Calculations:
| (Amount in $) | ||
| Product A additional CM = | =(20-6)*1,000 | |
| Product A additional cost = | 1,3000 | |
| Product A Advantage/Disadvantage = | =14,000-13,000 | Advantage |
| Product A sell or process further = | Process Further | |
| Product B additional CM = | =(13-8)*3,000 | |
| Product B additional cost = | 80,000 | |
| Product B Advantage/Disadvantage = | =15,000-80,000 | Disadvantage |
| Product B sell or process further = | Sell | |
| Product C additional CM = | =(32-5)*2,000 | |
| Product C additional cost = | 63,000 | |
| Product C Advantage/Disadvantage = | =54,000-63,000 | Disadvantage |
| Product C sell or process further = | Sell |
In case of any doubt, please comment.
In case of any doubt, please comment.
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