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Gennadij [26K]
3 years ago
7

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. 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: Product Selling Price Quarterly Output A $ 16 per pound 15,000 pounds B $ 8 per pound 20,000 pounds C $ 25 per gallon 4,000 gallons 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: Product Additional Processing Costs Selling Price A $ 63,000 $ 20 per pound B $ 80,000 $ 13 per pound C $ 36,000 $ 32 per gallon 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?
Business
1 answer:
Eduardwww [97]3 years ago
3 0

Answer:

Split-off point:

The split-off point is the point at which products from the joint process appear and are identified.  The costs which are incurred up to the split-off point are called joint costs and the costs that are incurred after the split-off point are called as

Separable costs. Some joint products which emerge from joint process can be sold at the split-off point or some products can be put to further processing.

Compute the profit or loss from the three products as shown below'

Description                                                              A               B               C

Selling price after further processing                    20              13              32

Selling price at the split off point                            16               8        25

Incremental revenue per pound or gallon             4               5         7

Total quarterly output in pounds or gallons     $15,000    $20,000    $4,000

Total incremental revenue                              $60,000   $100,000  $28,000

Total incremental processing costs              $63,000   $80,000  $36,000

Total incremental profit or (loss)                       ($3,000) $20,000  ($8,000)

Therefore the products A and C are need to be sold at the split off point and he product B should be processed further to earn good profits.  

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6 0
3 years ago
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2 years ago
A company purchased land for $90,000 cash. real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an ol
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3 0
3 years ago
Rick deposited $3,100 into an account 13 years ago for an emergency fund. Today, that account is worth $5,280. What annual rate
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Answer:

4.18%

Explanation:

The formula for used for this calculation is given as

Future value = Present( Initial) value  (1 + r)ⁿ

Where n = number of years of the investment = 13 years

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Present ( Initial) value (Amount of the investment before 13 years) =  $3,100

r = rate of return

The formula for r is derived as:

r = (Future value/ Present (initial) value)¹/ⁿ- 1

r = ($5,280/$3,100)¹/¹³ - 1

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r = 0.0418139573 × 100

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Haystack, Inc. manufactures machinery used in the mining industry. On January 1, 2017 it leased equipment with a cost of $480,00
HACTEHA [7]

Answer:

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By putting above values in formula, we get

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