Question

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up toRequired 1 Required 2 What is the financial advantage (disadvantage) of further processing each of the three products beyondRequired 1 Required 2 Based on your analysis in requirement 1, which product or products should be sold at the split-off poin

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Answer #1

1) Incremental analysis

A B C
Selling price after further processing 24 19 33
Selling price at split off 19 13 25
Incremental price 5 6 8
Quantity 12800 20000 4000
Incremental revenue 64000 120000 32000
Incremental cost -68500 -98250 -41600
Financial advantage (disadvantage) -4500 21750 -9600

Analysis

A B C
Sell at split off Yes No Yes
Process further No Yes No
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