Iacollia Company makes two products from a common input. Joint processing costs up to the split-off point total $47,600 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 |
23,800 |
23,800 |
47,600 |
|
Sales value at split-off point |
34,000 |
34,000 |
68,000 |
|
Costs of further processing |
20,900 |
21,800 |
42,700 |
|
Sales value after further processing |
53,600 |
60,100 |
113,700
|
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?