Exercise 13-6 Sell or Process Further (LO6)
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. 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
A $16 per pound 15,000
B $8 per pound 20,000
C $25 per gallon 4,000
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:
Processing Costs Selling Price
A $63,000 $20 per pound
B $80,000 $13 per pound
C $36,000 $32 per gallon
Which product or products should be sold at the split-off point and which product or products should be processed further? Show Computations.
Analysis of sell or process further:
Contribution margin 177,000 80,000 64,000
Advantage of processing further
Recently Asked Questions
- You are provided the following data from the market for Treasuries. The convention is semi-annual coupons and continuous compounding. (Ensure all calculations
- What are the limits and benefits of the expression: "Practice not-doing, / and everything will fall into place?" Verse 3, Thoughts from the Tao-te-Ching
- Please refer to the attachment to answer this question. This question was created from Auditing II ACC 492.docx.