Question - Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $93,000 per quarter. The company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows:
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Product
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Selling Price
|
Quarterly Output
|
|
A
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$ 5 per pound
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11,000 pounds
|
|
B
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$ 6 per pound
|
16,000 pounds
|
|
C
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$ 10 per gallon
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4,000 gallons
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Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing coasts (per quarter) and unit selling prices after further processing are given below:
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Product
|
Additional Processing Costs
|
Selling Price
|
|
A
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$43,000
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$ 7 per pound
|
|
B
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$40,000
|
$10 per pound
|
|
C
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$17,500
|
$21 per gallon
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Required: Compute the incremental profit (loss) for each product.