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?
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?
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter6: Process Cost Accounting—additional Procedures; Accounting For Joint Products And By-products
Section: Chapter Questions
Problem 13P: Venezuela Oil Inc. transports crude oil to its refinery where it is processed into main products...
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Question
Required 1:
Financial advantaged (disadvantage) of further processing-Product A: ? Product B: ? Product C: ?
Required 2:
Sell at split-off point?-Product A: ? Product B: ? Product C: ?
Process further?-Product A: ? Product B: ? Product C: ?
![Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the
split-off point total $310,000 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:
Selling Price
$12.00 per pound
$ 6.00 per pound
$18.00 per gallon
Quarterly
Output
11,400 pounds
17,900 pounds
2,600 gallons
Product
A
B
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:
Additional
Processing
Selling
Product
Costs
Price
$52,470
$74,345
$27,460
$16.30 per pound
$11.30 per pound
$25.30 per gallon
А
В
C
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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F05b60cb7-bf3e-4d2e-acc3-e41e18141760%2Fc2cfa3d2-b463-4fa2-8e97-03aa492f465a%2Fezh672f_processed.png&w=3840&q=75)
Transcribed Image Text:Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the
split-off point total $310,000 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:
Selling Price
$12.00 per pound
$ 6.00 per pound
$18.00 per gallon
Quarterly
Output
11,400 pounds
17,900 pounds
2,600 gallons
Product
A
B
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:
Additional
Processing
Selling
Product
Costs
Price
$52,470
$74,345
$27,460
$16.30 per pound
$11.30 per pound
$25.30 per gallon
А
В
C
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?
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