Dowchow Company Makes Two Products from a Common Input $\$ 38,400$

question 119

Multiple Choice

Dowchow Company makes two products from a common input. Joint processing costs up to the split-off point total $\$ 38,400$ 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:

$\begin{array}{|l|r|r|r|}\hline & \text { Product X } & \text { Product Y } & \text { Total } \\\hline \text { Allocated Joint Processing Costs } & 20,800 & 17,600 & 38,400 \\\hline \text { Sales Value at Split-Off Point } & 26,000 & 22,000 & 48,000 \\\hline \text { Costs of Further Processing } & 22,600 & 20,400 & 43,000 \\\hline \text { Sales Value after Further Processing } & 45,000 & 45,900 & 90,900 \\\hline\end{array}$
-What is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point?

• A) $1,600.
• B) ($3,600).
• C) $22,400.
• D) $27,600.

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