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    Net Monetary Advantage

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    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?

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    https://brainmass.com/business/competitive-advantage/net-monetary-advantage-122589

    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 ...

    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.

    $2.19

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