Ibsen Company makes two products from a common input. Joint processing costs up to the...
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Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $45,000 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:
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?
AllocatedjointprocessingcostsSalesvalueatsplit-offpointCostsoffurtherprocessingSalesvalueafterfurtherprocessingProductX$18,000$20,000$24,100$37,600ProductY$27,000$30,000$18,400$58,100Total$45,000$50,000$42,500$95,700 \begin{tabular}{|l|l|} \hline a. & \\ \hline b. & \\ \hline c. Minimum acceptable amount & \\ \hline d. Minimum acceptable amount & \\ \hline \end{tabular}
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