Sentinel Inc. manufactures three products from a common input ina joint processing operation. Joint processing costs up to thesplit-off point total $50,000 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, $25,000; Product Y, $45,000; and Product Z, $30,000. Eachproduct may be sold at the split-off point or processed further.The additional processing costs and the sales value after furtherprocessing for each product (on an annual basis) are asfollows:
Product X Product Y Product Z Additional processing costs $ 10,000 $ 32,000 $ 6,000 Sales value (after further processing) 40,000 75,000 37,000
Which of theproduct/s should the company be processing further?
Product X and Y
Product X
Products Y and Z
Product X and Z
Sentinel Inc. manufactures three products from a common input ina joint processing operation. Joint processing costs up to thesplit-off point total $50,000 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, $25,000; Product Y, $45,000; and Product Z, $30,000. Eachproduct may be sold at the split-off point or processed further.The additional processing costs and the sales value after furtherprocessing for each product (on an annual basis) are asfollows:
| Product X | Product Y | Product Z | ||||
| Additional processing costs | $ | 10,000 | $ | 32,000 | $ | 6,000 |
| Sales value (after further processing) | 40,000 | 75,000 | 37,000 | |||
| Which of theproduct/s should the company be processing further? |
Product X and Y
Product X
Products Y and Z
Product X and Z
Related questions
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 $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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Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $43,000 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 | $ | 25,800 | $ | 17,200 | $ | 43,000 | ||||
| Sales value at split-off point | $ | 30,000 | $ | 20,000 | $ | 50,000 | ||||
| Costs of further processing | $ | 23,800 | $ | 18,100 | $ | 41,900 | ||||
| Sales value after further processing | $ | 47,000 | $ | 57,500 | $ | 104,500 | ||||
Required:
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?
c. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?
d. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?
