Ibsen Company makes two products from a common input. Joint processing costs up to the split-off point total $48,600 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 XProduct YTotalAllocated joint processing costs$18,800? $29,800? $48,600? Sales value at split-off point$25,850? $37,800? $63,650? Costs of further processing$23,300? $17,600? $40,900? Sales value after further processing$48,800? $56,500? $105,300? 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?a.??b. ??c.Minimum acceptable amount?d.Minimum acceptable amount?
What will be an ideal response?
| a. | Financial disadvantage | $(350) |
| b. | Financial advantage | $1100? |
| c. | Minimum acceptable amount | $25,500? |
| d. | Minimum acceptable amount | $38,900? |
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