Purchase Solution

Net Monetary Advantage

Not what you're looking for?

Ask Custom Question

Mighty Meat Company makes two products from a common input. Joint processing costs up to the split-off point total $64,800 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 $32,400 $32,400 $64,800
Sales value at split-off point $36,000 $36,000 $72,000
Costs of further processing $20,300 $14,300 $34,600
Sales value after further processing $55,400 $53,000 $108,400

Required:
a. What is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point?
b. What is the net monetary 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?

Purchase this Solution

Solution Summary

This solution is comprised of solution and calculation to answer what is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point, what is the net monetary advantage (disadvantage) of processing Product Y beyond the split-off point, what is the minimum amount the company should accept for Product X if it is to be sold at the split-off point, what is the minimum amount the company should accept for Product Y if it is to be sold at the split-off point.

Solution Preview

Required:
a. What is the net monetary advantage (disadvantage) of processing Product X beyond the split-off point?

If the company sells Product X at the split-off point, the company will have the profit of
36,000 - 32,400 = 3,600

However, if the company further processes Product X, the company will have the profit of
55,400 - (32,400 + 20,300) = 2,700

Therefore, the net monetary ...

Purchase this Solution


Free BrainMass Quizzes
Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Operations Management

This quiz tests a student's knowledge about Operations Management