Adelphi Company makes two products from a common, joint input. Joint processing costs up to the split-off
Question:
Adelphi Company makes two products from a common, joint input.
Joint processing costs up to the split-off point (where the two separate products emerge) total $42,000 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point.
Each product may be sold at the split-off point, or processed further.
Data concerning these products appear below:
Product X | Product Y | Total | |
Allocated joint processing costs | $22,400 | $19,600 | $42,000 |
Sales value at split-off point | $32,000 | $28,000 | $60,000 |
Costs of further processing | $11,600 | $25,300 | $36,900 |
Sales value after further processing | $40,800 | $54,200 | $95,000 |
a. What is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point and then selling?
b. What is the net monetary advantage (disadvantage) of processing Product Y beyond the split-off point and then selling?
c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?
d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer