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In: Accounting
Exercise 12-7 Sell or Process Further Decisions [LO12-7] Dorsey Company manufactures three products from a common...
Exercise 12-7 Sell or Process Further Decisions [LO12-7]
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 pound | 19,100 | pounds | |
| C | $ | 22.00 | per gallon | 3,400 | 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 | $ | 61,390 | $ | 20.70 | per pound |
| B | $ | 87,645 | $ | 15.70 | per pound |
| C | $ | 35,300 | $ | 29.70 | 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?
Solutions
ekkarill92 answered 2 years agoRelated Solutions
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Problem 12-27 Sell or Process Further Decisions [LO12-7]
Come-Clean Corporation produces a variety of cleaning compounds
and solutions for both industrial and household use. While most of
its products are processed independently, a few are related, such
as the company’s Grit 337 and its Sparkle silver polish.
Grit 337 is a coarse cleaning powder with many industrial uses.
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Exercise 12-8 Volume Trade-Off Decisions [LO12-5, LO12-6] Barlow Company manufactures three products—A, B, and C. The...
Exercise 12-8 Volume Trade-Off Decisions [LO12-5, LO12-6]
Barlow Company manufactures three products—A, B, and C. The
selling price, variable costs, and contribution margin for one unit
of each product follow:
Product
A
B
C
Selling
price
$
180
$
300
$
260
Variable
expenses:
Direct
materials
20
90
30
Other variable
expenses
120
120
170
Total variable
expenses
140
210
200
Contribution
margin
$
40
$
90
$
60
Contribution
margin ratio
22
%
30
%
23
%
The same...
Exercise 12-8 Volume Trade-Off Decisions [LO12-5, LO12-6] Barlow Company manufactures three products—A, B, and C. The...
Exercise 12-8 Volume Trade-Off Decisions [LO12-5, LO12-6]
Barlow Company manufactures three products—A, B, and C. The
selling price, variable costs, and contribution margin for one unit
of each product follow:
Product
A
B
C
Selling price
$
180
$
270
$
240
Variable expenses:
Direct materials
24
80
32
Other variable expenses
102
90
148
Total variable expenses
126
170
180
Contribution margin
$
54
$
100
$
60
Contribution margin ratio
30
%
37
%
25
%
The same...
Ch 12: Hw alg 5: Exercise 12-8 Volume Trade-Off Decisions [LO12-5, LO12-6] Barlow Company manufactures three...
Ch 12: Hw alg 5: Exercise 12-8 Volume Trade-Off Decisions
[LO12-5, LO12-6]
Barlow Company manufactures three products—A, B, and C. The
selling price, variable costs, and contribution margin for one unit
of each product follow:
Product
A
B
C
Selling price
$
160
$
270
$
230
Variable expenses:
Direct materials
16
80
24
Other variable expenses
108
90
152
Total variable expenses
124
170
176
Contribution margin
$
36
$
100
$
54
Contribution margin ratio
23
%
37...
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 $ 20.00 per pound
13,000 pounds B $ 14.00 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 $335,000 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
$
17.00
per pound
12,400
pounds
B
$
11.00
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 $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 $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...
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 $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
Quarterly
Output
A
$
23.00
per pound
13,600
pounds
B
$
17.00
per...
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