Question
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing...
|
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $95,000 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 | $ | 3 | per pound | 18,000 | pounds | |
| B | $ | 4 | per pound | 23,000 | pounds | |
| C | $ | 9 | per gallon | 7,000 | 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: |
| Product | Additional Processing Costs |
Selling Price | ||||
| A | $ | 44,000 | $ |
5 |
per pound | |
| B | $ | 36,000 | $ | 7 | per pound | |
| C | $ | 10,250 | $ | 11 | per gallon | |
| Required: | |
| a. |
Compute the incremental profit (loss) for each product. |
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