Ibsen Company makes two products from a common input. Joint processing costs up to the...
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Accounting
Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $49,700 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
$
19,300
$
30,400
$
49,700
Sales value at split-off point
$
24,050
$
38,050
$
62,100
Costs of further processing
$
23,800
$
18,100
$
41,900
Sales value after further processing
$
47,000
$
57,500
$
104,500
Required:
a. What is financial advantage (disadvantage) of processing Product X beyond the split-off point? (Negative amount should be indicated by a minus sign.)
b. What is financial advantage (disadvantage) of processing Product Y beyond the split-off point? (Negative amount should be indicated by a minus sign.)
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