ABC Company makes two products from a common input. Joint processing costs up to the split-off...

ABC Company makes two products from a common input. Joint processing costs up to the split-off point total $51,500 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below:

	Product A		Product B		Total
Allocated joint processing costs	$	30,900	$	20,600	$	51,500
Sales value at split-off point	$	30,000	$	20,000	$	50,000
Costs of further processing	$	23,200	$	17,500	$	40,700
Sales value after further processing	$	48,600	$	56,300	$	104,900

Required:

a. What is financial advantage (disadvantage) of processing Product A beyond the split-off point? (Negative amount should be indicated by a minus sign.)

b. What is financial advantage (disadvantage) of processing Product B beyond the split-off point?

c. What is the minimum amount the company should accept for Product A if it is to be sold at the split-off point?

d. What is the minimum amount the company should accept for Product B if it is to be sold at the split-off point?

Garrison 16e Rechecks 2017-12-15

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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