Spartan Chemicals manufactures G-1, G-2, and G-3 from a joint process. Each gas

Question

Spartan Chemicals manufactures G-1, G-2, and G-3 from a joint process. Each gas can be liquiflied and sold for a higher price. Data on the process are as follows: Required: Determine the value of the missed item. (Do not round intermediate calculations.) G-1 G-3 Total Product Units produced Joint costs Sales value at split-off Additional costs to liqify 42,000 S 30,000 Sales value if liquified G-2 8,000 56,000 360.000 S 90,000 600,000 90,000 420,000 180,000 120,000 720,000 32,000 16,000 $180,000 8,000 The joint costs of $180,000 for G-1 is the portion of the total joint cost of $360,000 that had been allocated to G-1

Explanation / Answer

Product G-1 G-2 G-3 total Units produced 32,000 16,000 8,000 56,000 Joint costs 180,000 126,000 54,000 360,000 Sales value at split off 300,000 210,000 90,000 600,000 Addittional costs to liquify 42,000 30,000 18,000 90,000 Sales value if liquified 420,000 180,000 120,000 720,000 Sales at splits value G-1 180,000/360000=50% hence sales = 600000*50%=300,000 G-2 Sales at splits value 600,000 - (300,000+90,000) 210000 Ratio = 210,000/600000 0.35 35% hence joint cost 360,000*35% 126000 G-3 Joint costs 360,000 - (180000+126000) 54000

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