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 minimum amount the company should accept for Product X if it is to be sold at the split-off point?
A)$26,800
B)$19,800
C)$52,200
D)$45,200

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 minimum amount the company should accept for Product X if it is to be sold at the split-off point?
A)$26,800 
B)$19,800 
C)$52,200 
D)$45,200

Quizplus · Accepted Answer

The minimum amount the company should accept for Product X if it is to be sold at the split-off point is $26,800. This is because the company has already incurred $19,800 in costs to produce Product X, and it would need to sell the product for at least $26,800 to cover these costs and make a profit.

Dodrill Company Makes Two Products from a Common Input