Ibsen Company makes two products from a common input. Joint processing costs up to the split-off poi
Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $41,500 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 $ 16,600 $ 24,900 $ 41,500 Sales value at split-off point $ 20,000 $ 30,000 $ 50,000 Costs of further processing $ 22,700 $ 17,000 $ 39,700 Sales value after further processing $ 37,600 $ 55,300 $ 92,900
Required:
a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? (Negative amount should be indicated by a minus sign.)
b. What is financial 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?
