Dowchow Corporation 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:

-What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?
A)$22,400
B)$43,400
C)$20,800
D)$45,000

Question

Dowchow Corporation 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:

-What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?

-What is the minimum amount the company should accept for Product X if it is to be sold at the split-off point?
A)$22,400 
B)$43,400 
C)$20,800 
D)$45,000

Quizplus · Accepted Answer

The minimum amount the company should accept for Product X is the product's additional processing costs of $22,400 because at the split-off point, the product has not yet incurred any additional costs beyond the split-off point. Therefore, Choice A is the correct answer.

Dowchow Corporation Makes Two Products from a Common Input