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Svahn, AB, is a Swedish manufacturer of sailing yachts. The company has assembled the information shown below that pertains to two independent decision-making contexts. Case A: The company chronically has no idle capacity and the old Model B100 machine is the company's constraint. Management is considering purchasing a Model B300 machine to use in addition to the company's present Model B100 machine. The old Model B100 machine will continue to be used to capacity as before, with the new Model B300 machine being used to expand production. This will increase the company's production and sales. The increase in volume will be large enough to require increases in fixed selling expenses and in general administrative overhead, but not in the fixed manufacturing overhead. Case B : The old Model B100 machine is not the company's constraint, but management is considering replacing it with a new Model B300 machine because of the potential savings in direct materials with the new machine. The Model B100 machine would be sold. This change will have no effect on production or sales, other than some savings in direct materials costs due to less waste. Required: Based on the information provided above indicate in the appropriate column whether each item is relevant or irrelevant to the decision context described in Case A and Case B. Dorsey Company manufactures three products from a common input in a joint processing operation. Joint processing costs up to the split-off point total $315,000 per quarter. For financial reporting purposes, the company allocates these costs to the joint products on the basis of their relative sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows: Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling prices after further processing are given below: Required: 1. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? 2. Based on your analysis in requirement 1 , which product or products should be sold at the split-off point and which product or products should be processed further? Complete this question by entering your answers in the tabs below. What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point? (Do not round your intermediate calculations. Enter "disadvantages" as a negative value.) Based on your analysis in requirement 1 , which product or products should be sold at the split-off point and which product or products should be processed further? Juniper Design Limited of Manchester, England, provides design services to residential developers. Last year, the company had net operating income of $450,000 on sales of $2,000,000. The company's average operating assets for the year were $2,200,000 and its minimum required rate of return was 11%. Required: Compute the company's residual income for the year

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