Ibsen Company makes two products from a common input Joint processing costs up to the split off point total $50,500 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 $ 30,300 $ 20,200 $ 50,500 Sales value at split off point $ 30,000 $ 20,000 $ 50,000 Costs of further processing $ 23,400 $ 17,700 $ 41,100 Sales value after further processing $ 49,000 $ 56,700 $ 105,700 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

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Question: Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $50,500 a year. The company allocates these

Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $50,500 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	$	30,300	$	20,200	$	50,500
Sales value at split-off point	$	30,000	$	20,000	$	50,000
Costs of further processing	$	23,400	$	17,700	$	41,100
Sales value after further processing	$	49,000	$	56,700	$	105,700

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?

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