Response to the following problem:
Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $336,000 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:
| Product |
Selling Price |
Quarterly
Output |
| A |
$16 per pound |
14,600 pounds |
| B |
$7 per pound |
19,800 pounds |
| C |
$27 per gallon |
2,300 gallons |
Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below:
| Product |
Additional
Processing Costs |
Selling Price |
| A |
$64,600 |
$19 per pound |
| B |
$80,000 |
$15 per pound |
| C |
$36,300 |
$31 per gallon |
Required:
(a) Compute the incremental profit (loss) for each product. (Negative amounts should be indicated by a minus sign. Omit the "$" sign in your response.)
(b) Which product or products be sold at the split-off point?
(c) Which product or products should be processed further?