Question
In: Accounting
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing...
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $97,000 per quarter. 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 | $ | 4 | per pound | 14,000 | pounds | |
| B | $ | 5 | per pound | 19,000 | pounds | |
| C | $ | 12 | per gallon | 5,000 | 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 | $ | 43,000 | $ | 6 | per pound |
| B | $ | 40,000 | $ | 8 | per pound |
| C | $ | 16,250 | $ | 16 | per gallon |
Required:
a. Compute the incremental profit (loss) for each product.
b. Which product or products should be sold at the split-off point? (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.)
| Product A | |
| Product B | |
| Product C |
c. Which product or products should be processed further? (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.)
| Product A | |
| Product B | |
| Product C |
Solutions
Expert Solution
(a)
| Product | Quarterly Output | Selling Price |
Total Revenue (A) |
Post Processing SP |
Total Revenue (Post Processing) |
Additional Cost |
Net Revenue (B) |
Incremental profit (loss) (B-A) |
| A | 14,000 | $ 4 | $ 56,000 | $ 6 | $ 84,000 | $ 43,000 | $ 41,000 | $ (15,000) |
| B | 19,000 | $ 5 | $ 95,000 | $ 8 | $ 152,000 | $ 40,000 | $ 112,000 | $ 17,000 |
| C | 5,000 | $ 12 | $ 60,000 | $ 16 | $ 80,000 | $ 16,250 | $ 63,750 | $ 3,750 |
b. Product A
c. Product B and Product C
ekkarill92 answered 3 years agoRelated Solutions
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing...
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
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Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing...
Dorsey Company manufactures three products from a common input
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Product
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A
$
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B
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Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing...
Dorsey Company manufactures three products from a common input
in a joint processing operation. Joint processing costs up to the
split-off point total $380,000 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
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Product
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Quarterly
Output
A
$
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pounds
B
$
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Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing...
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in a joint processing operation. Joint processing costs up to the
split-off point total $320,000 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
$
14.00
per pound
11,800
pounds
B
$
8.00
per...
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing...
Dorsey Company manufactures three products from a common input
in a joint processing operation. Joint processing costs up to the
split-off point total $365,000 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
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Output
A
$
23.00
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B
$
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Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing...
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...
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing...
Dorsey Company manufactures three products from a common input
in a joint processing operation. Joint processing costs up to the
split-off point total $380,000 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
$
26.00
per pound
14,200
pounds
B
$
20.00
per...
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing...
Dorsey Company manufactures three products from a common input
in a joint processing operation. Joint processing costs up to the
split-off point total $330,000 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
$
16.00
per pound
12,200
pounds
B
$
10.00
per...
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing...
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in a joint processing operation. Joint processing costs up to the
split-off point total $345,000 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
$
19.00
per pound
12,800
pounds
B
$
13.00
per...
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Dorsey Company manufactures three products from a common input
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sales value at the split-off point. Unit selling prices and total
output at the split-off point are as follows:
Product
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