Iaci Company Makes Two Products from a Common Input Required:
A)What Is the Net Monetary Advantage (Disadvantage)of Processing Product

question 117

Essay

Iaci Company makes two products from a common input.Joint processing costs up to the split-off point total $42,000 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:
$\begin{array}{|l|r|r|r|}\hline & \text { Product X } & \text { Product Y } & \text { Total } \\\hline \text { Allocated Joint processing costs } & \$ 22,000 & \$ 19,600 & \$ 42,000 \\\hline \text { Sales value at split-off point } & \$ 32,000 & \$ 28,000 & \$ 60,000 \\\hline \text { Costs of further processing } & \$ 11,600 & \$ 25,300 & \$ 36,900 \\\hline \text { Sales value after further processing } & \$ 40,800 & \$ 54,200 & \$ 95,000 \\\hline\end{array}$
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?

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Definitions:

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