Dodrill 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:
-What is the net monetary advantage (disadvantage)of processing Product X beyond the split-off point?
A)$26,800
B)$7,000
C)$4,800
D)$29,000

Question

Dodrill 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: 
-What is the net monetary advantage (disadvantage)of processing Product X beyond the split-off point?
A)$26,800 
B)$7,000 
C)$4,800 
D)$29,000

Quizplus · Accepted Answer

The net monetary advantage (disadvantage) is calculated by comparing the additional revenue from processing beyond the split-off point with the additional costs incurred. The correct calculation results in a net advantage of $4,800.

Dodrill Company Makes Two Products from a Common Input