Acc505 Managerial Accounting: Iacollia Company makes two products from a common input

Acc505 Managerial Accounting
Week 8

Iacollia Company makes two products from a common input. Joint processing costs up to the split-off point total $47,600 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 23,800 23,800 47,600
Sales value at split-off point 34,000 34,000 68,000
Costs of further processing 20,900 21,800 42,700
Sales value after further processing 53,600 60,100 113,700

Required:
a. What is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point?
b. What is the net monetary 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?
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