Question
In: Accounting
bsen Company makes two products from a common input. Joint processing costs up to the split-off...
bsen 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 X | Product Y | 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 X beyond the split-off point? (Negative amount should be indicated by a minus sign.)
b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point?
c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?
d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?
Solutions
Expert Solution
a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point?
| Sale value ( after further processing) | 48600 |
| Sale value at split of point | 30000 |
| Incremental Revenue | 18600 |
| (-) Further processing cost | 23200 |
| Financial Disadvantage | - 4600 |
b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point?
| Sale value after split | 56300 |
| Sale value at split of point | 20000 |
| Incremental revenue | 36300 |
| (-) Further processing cost | 17500 |
| Financial advantage | 18800 |
c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?
Minimum price (amount) at split = Final sale value - Further processing cost. It means that incremental revenue must at least pay for additional or further processing costs.
= 48600 - 23200 = 25400 ............. final answer
d . Minimum price = 56300 - 17500 = 38800 ...........final answer
ekkarill92 answered 1 year agoRelated Solutions
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...
Iaci Company makes two products from a common input. Joint processing costs up to the split-off...
Iaci Company makes two products from a common input. Joint
processing costs up to the split-off point total $48,900 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 X
Product Y
Total
Allocated joint
processing costs
$
19,100
$
29,800
$
48,900
Sales value...
Ibsen Company makes two products from a common input. Joint processing costs up to the split-off...
Ibsen Company makes two products from a common input. Joint
processing costs up to the split-off point total $46,000 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 X
Product Y
Total
Allocated joint processing costs
$
18,400
$
27,600
$
46,000
Sales value at split-off point...
Ibsen Company makes two products from a common input. Joint processing costs up to the split-off...
Ibsen Company makes two products from a common input. Joint
processing costs up to the split-off point total $48,000 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 X
Product Y
Total
Allocated joint processing costs
$
19,200
$
28,800
$
48,000
Sales value at split-off point...
Ibsen Company makes two products from a common input. Joint processing costs up to the split-off...
Ibsen Company makes two products from a common input. Joint
processing costs up to the split-off point total $50,500 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 X
Product Y
Total
Allocated joint
processing costs
$
30,300
$
20,200
$
50,500
Sales value at split-off
point...
Iaci Company makes two products from a common input. Joint processing costs up to the split-off...
Iaci Company makes two products from a common input. Joint
processing costs up to the split-off point total $42,000 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 X Product Y Total
Allocated joint processing costs
22,400
19,600
42,000
Sales value at split off
point
32,000
28,000 ...
Ibsen Company makes two products from a common input. Joint processing costs up to the split-off...
Ibsen Company makes two products from a common input. Joint
processing costs up to the split-off point total $47,700 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 X
Product Y
Total
Allocated joint
processing costs
$
18,600
$
29,100
$
47,700
Sales value at split-off
point...
bsen Company makes two products from a common input. Joint processing costs up to the split-off...
bsen Company makes two products from a common input. Joint
processing costs up to the split-off point total $53,700 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 X
Product Y
Total
Allocated joint
processing costs
$
20,400
$
33,300
$
53,700
Sales value at split-off
point...
Cows Creamery Company makes two products from a common input. Joint processing costs up to the...
Cows Creamery Company makes two
products from a common input. Joint processing costs up to the
split-off point total $42,000 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:
Gooey Mooey
Wowie Cowie
Total
Allocated Joint processing costs
$22,000
$19,600
$41,600
Sales value at split-off point
$32,000
$28,000...
Gutten company makes three products from a common input in a joint processing operation. Joint processing...
Gutten company makes three products from a common input in a
joint processing operation. Joint processing costs up to the
split-off point total $98,000 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
$
5
per pound
10,000
pounds
B
$
7
per pound
22,000
pounds
C...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- In a two – story building, an exterior column is to be designed for a service...
- Explain the use of neural networking modeling in predictive analytics. Discuss a real-life example of where...
- Boarder line and antisocial disorder are perhaps the most research personality disorder.What are the most common...
- Read at least 2 academically reviewed articles and Write an annotated bibliography paper on Master Budgeting
- Why normalization and referential integrity are important principles when designing relational databases?
- Respond to the following in a minimum of 175 words: Discuss what elements should be present...
- 1) The 3rd bright fringe of a double slit interference pattern is 30.0 cm above the...
ADVERTISEMENT