Iacollia Company makes two products from a common input. Joint processing costs up to the split-off…

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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