Which product or products should be sold at the split-off, Ask an Expert

Accounting

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 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:

Which product or products should be sold at the split-off point and which product or products should be processed further? Show computations.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9420074

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