I need a correct answer please!!! Cornerstone Exercise 7.10 Allocating Joint Cos
ID: 2493141 • Letter: I
Question
I need a correct answer please!!!
Cornerstone Exercise 7.10
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 $12,900. 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:
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 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.
Joint Cost Grades Allocation L-Ten $ Triol Pioze Total $Explanation / Answer
1. Allocation of Joint cost of $12,900 using Net Realisable value method
Product
Percentage
Joint cost Allocation (in $)
L-Ten
16.1538
2,084
Triol
49.2308
6,351
Pioze
34.6154
4,465
Total
12,900
Note: Amount rounded off to nearest dollar
Working Note:
Product
Externam Market Price per gallon
(in $)
Further processing cost per gallon
(in $)
No. of gallons
Total
% of Total
A
B
C=A-B
D
E=C*D
(E/32,500)*100
L-Ten
2
0.50
1.50
3,500
5,250
16.1538
Triol
5
1.00
4.00
4,000
16,000
49.2308
Pioze
6
1.50
4.50
2,500
11,250
34.6154
Total
32,500
100
2. Allocation of Joint cost of $12,900 using Net Realisable value method when cost of Triol for further processing is $2.
Product
Percentage
Joint cost Allocation (in $)
L-Ten
18.4211
2,376
Triol
42.1053
5,432
Pioze
39.4736
5,092
Total
12,900
Note: Amount rounded off to nearest dollar
Working Note:
Product
Externam Market Price per gallon
(in $)
Further processing cost per gallon
(in $)
No. of gallons
Total
% of Total
A
B
C=A-B
D
E=C*D
(E/28,500)*100
L-Ten
2
0.50
1.50
3,500
5,250
18.4211
Triol
5
2.00
3.00
4,000
12,000
42.1053
Pioze
6
1.50
4.50
2,500
11,250
39.4736
Total
28,500
100
Product
Percentage
Joint cost Allocation (in $)
L-Ten
16.1538
2,084
Triol
49.2308
6,351
Pioze
34.6154
4,465
Total
12,900
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