(Solved) Ibsen Company makes two products from a common input. Joint processing costs up to the split-off ...

Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $50,500 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:

	Product X	Product Y	Total
Allocated joint processing costs	$ 30,300	$ 20,200	$ 50,500
Sales value at split-off point	$ 30,000	$ 20,000	$ 50,000
Costs of further processing	$ 23,400	$ 17,700	$ 41,100
Sales value after further processing	$ 49,000	$ 56,700	$ 105,700

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?

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Ibsen Company makes two products from a common input. Joint processing costs up to the split-off ...

Introduction to Managerial Accounting: Brewer Edition: 9e

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