Ibsen Company makes two products from a common input.Joint processing costs up to the split-off point total $43,200 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:
Required:
a.What is financial advantage (disadvantage)of processing Product X beyond the split-off point?
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?

Question

Ibsen Company makes two products from a common input.Joint processing costs up to the split-off point total $43,200 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:
  Required:
a.What is financial advantage (disadvantage)of processing Product X beyond the split-off point?
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?

Quizplus · Accepted Answer

The Answer of Ibsen Company makes two products from a common input.Joint processing costs up to the split-off point total $43,200 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:
  Required:
a.What is financial advantage (disadvantage)of processing Product X beyond the split-off point?
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?

Ibsen Company Makes Two Products from a Common Input