Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point
Question:
Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $47,500 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$28,500$19,000$47,500Sales value at split-off point$30,000$20,000$50,000Costs of further processing$24,600$18,900$43,500Sales value after further processing
$48,600$59,100$107,700
Required:
a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point?(Negative amount should be indicated by a minus sign.)
b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point?
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