Dodge Company makes two products from a common input. Joint processing costs up to the split-off point total $44,800 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 Y beyond the split-off point?
A) $39,600
B) $51,000
C) $13,000
D) $1,600

Question

Quizplus · Accepted Answer

The net monetary advantage (disadvantage) of processing Product Y beyond the split-off point is calculated by comparing the additional revenue from further processing with the additional costs incurred. The additional revenue from processing Product Y further is $51,000, and the additional costs are $49,400, resulting in a net advantage of $1,600.

Dodge Company Makes Two Products from a Common Input