Cornerstone Exercise 7.10 (Algorithmic) Allocating Joint Costs Using the Net Rea
ID: 2417640 • Letter: C
Question
Cornerstone Exercise 7.10 (Algorithmic)
Allocating Joint Costs Using the Net Realizable Value Method
A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs $12,600. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as follows:
Product
Required:
1. Allocate the joint cost to L-Ten, Triol, and Pioze using the net realizable value method. Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar.
2. What if it cost $2.20 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of joint cost to the three products? Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar.
Product
Gallons Further ProcessingCost per Gallon Eventual Market
Price per Gallon L-Ten 3,300 $0.40 $2.50 Triol 3,800 1.20 4.90 Pioze 2,500 1.50 6.50
Explanation / Answer
Net realisable value= Sales value - further processing cost
Cost allocated
Net realisable value
Allocated cost
L- Ten =8,250 - 1,320 6,930 Triol =18,620- $4,560 14,060 Pioze 16,250 -3,750 12,500 total $33,490Related Questions
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