The Dorsey Company produces three products from a common input in a joint processing operation. Co-processing costs up to the point of separation are a quarterly total of $365,000. For financial reporting purposes, the company allocates these costs to the joint products according to their relative sales values at the point of division. The unit sales prices and total production at the point of departure are as follows:

Product	Sale price			Quarterly Output
A	$	23.00	per pound		13.600	pound
B	$	17.00	per pound		21.200	pound
C	$	29.00	per gallon		4.800	heart

Each product can be further processed after the split point. Additional processing does not require special facilities. Additional processing costs (per quarter) and unit selling prices after further processing are given below:

Product	Additional Processing Costs		Sale Price
A	$	78.540	$	28.40	per pound
B	$	113.230	$	23.40	per pound
C	$	50.560	$	37.40	per gallon

Necessary:

1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split point?

2. Based on your analysis in Requirement 1, which product or products should be sold at the split point and which product or products should be further processed?

Complete this question by entering your answers in the tabs below.

required 1

What is the financial advantage (disadvantage) of further processing each of the three products beyond the split point? (Enter "Disadvantages" as a negative value.)

	Product A	Product B	Product C
Financial advantage (disadvantage) of further processing

required 2

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

	Product A	Product B	Product C
Sell at the point of departure?
More action?

Answer rating: 100% (QA)

To determine the financial advantage or disadvantage of further processing each product beyond the split point we need to compare the additional proce... View the full answer