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
B $8 per pound 20,000
C $25 per gallon 4,000
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
Compute the incremental profit (loss) for each product.
Which product or products should be sold at the split-off point and which product or products should be processed further? Show Computations.

Answer rating: 100% (QA)

A B C Selling price after further processing 20 13 32 Selling price at the splitoff point 16 8 ... View the full answer