Net monetary advantage-disadvantage of processing product


Problem:

Mighty Meat Company makes two products from a common input. Joint processing costs up to the split-off point total $64,800 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          $32,400    $32,400    $64,800
Sales value at split-off point               $36,000    $36,000    $72,000
Costs of further processing                $20,300    $14,300    $34,600
Sales value after further processing    $55,400    $53,000    $108,400

Required to do:

Q1. What is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point?

Q2. What is the net monetary advantage (disadvantage) of processing Product Y beyond the split-off point?

Q3. What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?

Q4. What is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point?

Solution Preview :

Prepared by a verified Expert
Other Management: Net monetary advantage-disadvantage of processing product
Reference No:- TGS01981945

Now Priced at $25 (50% Discount)

Recommended (93%)

Rated (4.5/5)