Question

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	$	24,700		$	38,600		$	63,300
Costs of further processing	$	24,900		$	19,200		$	44,100
Sales value after further processing	$	49,200		$	59,700		$	108,900

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? (Negative amount should be indicated by a minus sign.)

Answer 1

Statement showing computations
Particulars	Product X	Product Y
Sales value after further processing	49,200.00	59,700.00
Sales value at split off point	24,700.00	38,600.00
Incremental revenue	24,500.00	21,100.00
Total Incremental Processing costs	24,900.00	19,200.00
Total Incremental profit or loss	(400.00)	1,900.00
	Sold at split off	Process Further
a) (disadvantage) of processing Product X beyond the split-off point	(400.00)
b)advantage of processing Product Y beyond the split-off point	1,900.00