Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $91,000 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
Output |
| A |
$ |
5 |
per pound |
|
11,000 |
pounds |
| B |
$ |
6 |
per pound |
|
16,000 |
pounds |
| C |
$ |
12 |
per gallon |
|
5,000 |
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 |
$ |
37,000 |
|
$ |
8
|
per pound |
| B |
$ |
36,000 |
|
$ |
10 |
per pound |
| C |
$ |
10,000 |
|
$ |
16 |
per gallon |
1. Compute the incremental profit (loss) for each product.
2. Which product or products should be sold at the split-off point? Product A Product B or Product C select all that apply
3. Which product or products should be processed further? Product A Product B or Product C select all that apply