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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 $41,500 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 $ 16,600 $ 24,900 $ 41,500
Sales value at split-off point $ 20,000 $ 30,000 $ 50,000
Costs of further processing $ 22,700 $ 17,000 $ 39,700
Sales value after further processing $ 37,600 $ 55,300 $ 92,900

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?

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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