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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Danelle, Inc., produces four products (Alpha, Beta, Gamma, and Delta) from a com-
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mon input. The joint costs for a typical quarter follow: |
Sell or Process |
|
|
Direct materials |
$128,000 |
Further; Basic |
|
Direct labor |
56,000 |
Analysis |
|
Overhead |
80,000 |
LO1, LO2, LO3 |
The revenues from each product are as follows: Alpha, $130,000; Beta, $93,000; Gamma, $30,000; and Delta, $40,000.
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Management is considering processing Delta beyond the split-off point, which would increase the sales value of Delta to $73,700. However, to process Delta further means that the company must rent some special equipment costing $15,400 per quarter. Additional materials and labor also needed would cost $8,500 per quarter.
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1.   What is the operating profit earned by the four products for one quarter?
2.   Should the division process Product Delta further or sell it at split-off? What is the effect of the decision on quarterly operating profit?
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