1 answer

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing...

Question:

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to

Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $93,000 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 S3 per pound $ 4 per pound S8 per gallon Quarterly Output 17,000 pounds 22.000 pounds 8.000 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 $ 43,000 $ 39,000 $ 12.750 Selling Price $ 5 per pound S 7 per pound $ 10 per gallon Required: a. 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

Answers

Solution:

Product A Product B Product C
Selling Price after further processing (a) $ 5 $ 7 $ 10
Selling Price at split off point (b) 3 $ 4 $ 8
Incremental revenue per pound or gallon (c) = (a) - (b) 2 $ 3 $ 2
Total quarterly output in pounds or gallons (d) 17,000 22,000 8,000
Total incremental revenue (e) = (d) x (c) 34,000 66,000 16,000
Total incremental processing costs (f) 43,000 39,000 12,750
Total incremental profit or ( loss ) (e) - (f) $ (9,000) 27,000 3,250

The incremental profit shows the additional profit earned by further processing the product instead of selling the product at split off point. This profit arises because the additional costs incurred to further process it is less than the increase in revenue earned by selling it after further processing.

Since there is an incremental loss in product A we should not further process it while product B and C show incremental profits so we should further process these products.

.

Similar Solved Questions

1 answer
Use 2's complement conversion to determine the value of the signed binary number 1101. Use 2's...
Use 2's complement conversion to determine the value of the signed binary number 1101. Use 2's complement conversion to determine if the signed binary number 11111101 is equivalent to the signed binary number 1101....
1 answer
X)=x 5x 6 (a) Find all zeros of P, real and complex. (Enter your answers as...
x)=x 5x 6 (a) Find all zeros of P, real and complex. (Enter your answers as a comma-separated list. Enter all answers including -6, V6, -i X = (b) Factor P completely. P(x) = (22-6)(22+1)...
1 answer
5. Methanol gas combustion is represented with the following reaction 2 H3C-O-H(g) + 3 0=0(g) 20=C=O(g)...
5. Methanol gas combustion is represented with the following reaction 2 H3C-O-H(g) + 3 0=0(g) 20=C=O(g) + 4H-O-H(g) Calculate the AH x using the average bond dissociation energies from the table below, for 1 mole of methanol. Bond Energy kJ/mol Bond Energy kJ/mol Bond Energy kJ/mol Bond Bond 436 347...
1 answer
Question 4 (20 marks) The comparative Balance Sheets and the Income statement for the Marine Corporation...
Question 4 (20 marks) The comparative Balance Sheets and the Income statement for the Marine Corporation are as follow: Marine Corporation Balance Sheet Assets 2019 2020 Cash $45,000 $50,000 Marketable Securities 175.000 160,000 Accounts Receivable 240,000 220,000 inventories 230,000 275,000 Investm...
1 answer
3. (40%) Using suitable trig identities, find all possible solutions (Oº sa <360°) to the following...
3. (40%) Using suitable trig identities, find all possible solutions (Oº sa <360°) to the following equation (show every step to get full marks): 1 1 1 - tan(a) 1+ tan(a) 1...
1 answer
You are designing a simple system for managing grades of students in a computer science course...
You are designing a simple system for managing grades of students in a computer science course and need to track each student's first name, last name, eight-digit CUNY Id, grade, and courseld - referencing a second table with all the names and numbers of computer science courses. [1] Write the S...
1 answer
Southern California Publishing Company is trying to decide whether to revise its popular textbook, Financial Psychoanalysis...
Southern California Publishing Company is trying to decide whether to revise its popular textbook, Financial Psychoanalysis Made Simple. The company has estimated that the revision will cost $90,000. Cash flows from increased sales will be $20,800 the first year. These cash flows will increase by 4 ...
2 answers
Simpson drives his car with an average velocity of 24 m/s toward the east
Simpson drives his car with an average velocity of 24 m/s toward the east. How long will it take him to drive 560 km on a perfectly straight highway?...
1 answer
1. What would you recommend Pandora Radio to do in order to increase Customer Lifetime Value?...
1. What would you recommend Pandora Radio to do in order to increase Customer Lifetime Value? 2. What are current Pandora's Radio CRM strategies? (CRM, Customer Relationship Management)...
1 answer
True or False and Explain why in a paragraph: Banks have effectively reduced risk using financial...
True or False and Explain why in a paragraph: Banks have effectively reduced risk using financial futures....
1 answer
5. Problem 17.07 (Pro Forma Income Statement) eBook At the end of last year, Roberts Inc....
5. Problem 17.07 (Pro Forma Income Statement) eBook At the end of last year, Roberts Inc. reported the following income statement (in millions of dollars): $3,000 2,450 Sales Operating costs excluding depreciation EBITDA Depreciation $550 250 EBIT Interest $300 125 $175 70 EBT Taxes (40%) Net income...
1 answer
I need help. PLEASE DONT USE THE STANDARD NORMAL DISTRIBUTION TABLE. use normalcdf as part of...
I need help. PLEASE DONT USE THE STANDARD NORMAL DISTRIBUTION TABLE. use normalcdf as part of your answer. Thank you 8.1.19 Question Help Suppose the lengths of the pregnancies of a certain animal are approximately normally distributed with mean = 212 days and standard deviation o 13 days. Complete ...
1 answer
Let a, b ∈ R with a < b. Let f : [a, b] → [a,...
Let a, b ∈ R with a < b. Let f : [a, b] → [a, b] be continuous. Then there exists at least one ∈ [a, b] such that . We were unable to transcribe this imagef(x0) = x0...
1 answer
How do you think low economic status in developed countries compares to low economic status of...
How do you think low economic status in developed countries compares to low economic status of undeveloped countries? How would a carbon footprint differ between these two groups? (take into account production and transportation costs)...
1 answer
Part C - Calculating probabilities in pedigrees of X-linked conditions The pedigree from Part B is...
Part C - Calculating probabilities in pedigrees of X-linked conditions The pedigree from Part B is shown below. Female III-4 is pregnant via male III-5. The owner of this breeding pair wants to know the probabilities of several possible outcomes for their offspring (IV-3). If you need help with how...