Problem
Iaukea Company makes two products from a common input. Joint processing costs up to the split-off point total $48,700 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
|
$
|
18,900
|
$
|
29,800
|
$
|
48,700
|
|
Sales value at split-off point
|
$
|
25,900
|
$
|
37,850
|
$
|
63,750
|
|
Costs of further processing
|
$
|
23,400
|
$
|
17,700
|
$
|
41,100
|
|
Sales value after further processing
|
$
|
49,000
|
$
|
56,700
|
$
|
105,700
|
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?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.