Solex Company manufactures three products from a common input ina joint processing operation. Joint processing costs up to thesplit-off point total $99,000 per year. The company allocates thesecosts to the joint products on the basis of their total sales valueat the split-off point. These sales values are as follows: productX, $54,000; product Y, $92,000; and product Z, $61,000.
Each product may be sold at thesplit-off point or processed further. Additional processingrequires no special facilities. The additional processing costs andthe sales value after further processing for each product (on anannual basis) are shown below:
Product Additional
Processing Costs Sales Value after
Further Processing X $ 36,000 $ 84,000 Y $ 39,000 $ 161,000 Z $ 10,000 $ 79,000
Required: a. Compute the incremental profit (loss) for each product.
Solex Company manufactures three products from a common input ina joint processing operation. Joint processing costs up to thesplit-off point total $99,000 per year. The company allocates thesecosts to the joint products on the basis of their total sales valueat the split-off point. These sales values are as follows: productX, $54,000; product Y, $92,000; and product Z, $61,000.
Each product may be sold at thesplit-off point or processed further. Additional processingrequires no special facilities. The additional processing costs andthe sales value after further processing for each product (on anannual basis) are shown below: |
| Product | Additional Processing Costs | Sales Value after Further Processing | ||
| X | $ | 36,000 | $ | 84,000 |
| Y | $ | 39,000 | $ | 161,000 |
| Z | $ | 10,000 | $ | 79,000 |
| Required: | |
| a. | Compute the incremental profit (loss) for each product. |
Related questions
Solex Company manufactures three products from a common input ina joint processing operation. Joint processing costs up to thesplit-off point total $94,000 per year. The company allocates thesecosts to the joint products on the basis of their total sales valueat the split-off point. These sales values are as follows: productX, $52,000; product Y, $91,000; and product Z, $62,000. |
Each product may be sold at thesplit-off point or processed further. Additional processingrequires no special facilities. The additional processing costs andthe sales value after further processing for each product (on anannual basis) are shown below: |
| Product | Additional Processing Costs | Sales Value after Further Processing | ||
| X | $ | 39,000 | $ | 81,000 |
| Y | $ | 39,000 | $ | 160,000 |
| Z | $ | 11,000 | $ | 81,000 |
| Required: | |
| a. | Compute the incremental profit (loss) for each product.(Loss amounts should be indicated with a minussign.) |
| Product X | Product Y | Product Z | |
| Incremental profit(loss) | $ | $ | $ |
| b. | Which product or products should be sold at the split-off point?(You may select more than one answer.Single click the box with the question mark to produce a check markfor a correct answer and double click the box with the questionmark to empty the box for a wronganswer.) | ||||||
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| c. | Which product or products should be processed further?(You may select more than one answer.Single click the box with the question mark to produce a check markfor a correct answer and double click the box with the questionmark to empty the box for a wronganswer.) | ||||||
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Dorsey Company manufactures three products from a common inputin a joint processing operation. Joint processing costs up to thesplit-off point total $91,000 per quarter. The company allocatesthese costs to the joint products on the basis of their relativesales value at the split-off point. Unit selling prices and totaloutput at the split-off point are as follows:
| Product | Selling Price | Quarterly Output |
| A | $3 per pound | 19,000 pounds |
| B | $4 per pound | 24,000 pounds |
| C | $11 per gallon | 6,000 gallons |
Each product can be processed further after thesplit-off point. Additional processing requires no specialfacilities. The additional processing costs (per quarter) and unitselling prices after further processing are given below:
| Product | Additional Processing Costs | Selling Price |
| A | $40,000 | $4 per pound |
| B | $38,000 | $7 per pound |
| C | $14,250 | $14 per gallon |
Required:
Compute the incremental profit (loss) for each product.
Product A | Product B | Product C | |
Selling price after further processing | |||
Selling price at the split-off point | |||
Incremental revenue per pound or gallon | |||
Total quarterly output in pounds or gallons | |||
Total incremental revenue | |||
Total incremental processing costs | |||
Total incremental profit or loss |
Which product or products should be sold at the split-offpoint?
Product A
Product B
Product C
Which product or products should be processed further? (You mayselect more than one answer.
Product A
Product B
Product C
