Question: Dock Corporation makes two products from a common input. Joint processing costs up to the split-off point total $33,600 a year. The company allocates these
Dock Corporation makes two products from a common input. Joint processing costs up to the split-off point total $33,600 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 | $ | 16,800 | $ | 16,800 | $ | 33,600 |
| Sales value at split-off point | $ | 24,000 | $ | 24,000 | $ | 48,000 |
| Costs of further processing | $ | 15,000 | $ | 18,700 | $ | 33,700 |
| Sales value after further processing | $ | 35,500 | $ | 45,100 | $ | 80,600 |
What is the financial advantage (disadvantage) for the company of processing Product Y beyond the split-off point?
Multiple Choice
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$9,600
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$2,400
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$33,600
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$26,400
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