Answer:
The correct answer for (a) is option (a) and for (b) is option (c).
Explanation:
Revenue if processed further = Sales per unit - Processing cost per unit
a).
Product X = $29 - $7 = $22
Product Y = $29 - $7.50 = $21.50
Product Z = $30 - $7 = $23
Revenue increase=revenue if processed further-split off sales value
Product X= $22 - $19 = $3
Product Y= $21.50 - $21 = $.50
Product Z= $23 - $24= -1 or 0
Product X and Product Y should be processed beyond the split off points. So,option A is correct.
b).
Pediatrics department allocated personnel department cost = Pediatrics employee cost hour × Personnel department ÷ ( Pediatrics employee hours + Prenatal employee hours)
= 14,000 × $29,200 ÷ ( 14000 + 26000)
= 40,88,000,00 ÷ 40,000
= $10,220
Pediatrics department allocated support department cost = Pediatrics department space occupied × Support department cost ÷ (Pediatrics department space occupied + Prenatal department space occupied)
=8000 × $55,040 ÷ (8000 + 35000)
=$44,03,20,000 ÷ 43000
=$10,240
After the allocation of service total pediatric department cost= Pediatrics department allocated support department cost + Pediatrics department allocated personnel department cost + Pediatrics department cost
= $10,240 + $10,220 + $423,200
= $4,43,660.
According to the analysis option C is correct.
