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Exercise $13-7($Algo$)$ Sell or Process Further Decisions $[$LO$13-7]$

$2\mathrm{.}22$

points

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split$-$off point total $$300,000$ per quarter. For financial reporting purposes, the company allocates these costs to the joint products based on their relative sales value at the split$-$off point. Unit selling prices and total output at the split$-$off point are as follows:

$\backslash$table$[[$Product$,$Selling Price,Quarterly Output$],[$A$,$$$10\mathrm{.}00$ per pound,$11,000$ pounds$],[$B$,$$$4\mathrm{.}00$ per pound,$17,300$ pounds$],[$C$,$$$16\mathrm{.}00$ per gallon,$2,200$ gallons$]]$

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:

$\backslash$table$[[,\backslash$table$[[$Additional$],[$Processing$],[$Costs$]],],[$Product$,$Selling Price,$],[$A$,$$$48,250,$$$14\mathrm{.}10$ per pound$],[$B$,$$$68,055,$$$9\mathrm{.}10$ per pound$],[$C$,$$$23,780,$$$23\mathrm{.}10$ per g$$llon$]]$

Required:

What is the financial advantage $($disadvantage$)$ of further processing each of the three products beyond the split$-$off point?

Based on your analysis in requirement $1,$ which product or products should be sold at the split$-$off point and which should be processed further?