Product X and Y are made from a common input. Joint processing costs up to the...
Product X and Y are made from a common input. Joint processing costs up to the split-off point total $46,900 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 | $ | 18,300 | $ | 28,600 | $ | 46,900 | ||||
| Sales value at split-off point | $ | 25,600 | $ | 37,350 | $ | 62,950 | ||||
| Costs of further processing | $ | 22,800 | $ | 17,100 | $ | 39,900 | ||||
| Sales value after further processing | $ | 47,800 | $ | 55,500 | $ | 103,300 | ||||
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? (Negative amount should be indicated by a minus sign.)
Homework Answers
a) Financial advantage of processing product X
| Sale value after further processing | 47800 |
| Sale value at split off | 25600 |
| Incremental revenue | 22200 |
| Cost of further processing | -22800 |
| Financial Advantage (Disadvantage) | -600 |
b) Financial advantage of processing product Y
| Sale value after further processing | 55500 |
| Sale value at split off | 37350 |
| Incremental revenue | 18150 |
| Cost of further processing | -17100 |
| Financial Advantage (Disadvantage) | 1050 |
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Product X and Y are made from a common input. Joint processing
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Product X and Y are made from a common input. Joint processing costs up to the...
Product X and Y are made from a common input. Joint processing costs up to the split-off point total $46,000 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 $ 18,000 $ 28,000 $ 46,000 Sales value at split-off...
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