b) Allocate the joint product costs on the basis of physical units: Talcom: ____

Question

b)              Allocate the joint product costs on the basis of physical units:

                  Talcom: _____________

                  Sweet Smelling: _____________

                  Regular: _________________

c)              Allocate the joint product costs on the basis of the NRV after further processing:

                  Talcom: _____________

                  Sweet Smelling: _____________

                  Regular: _________________

Number of Pounds Price per Pound at Split-Off Price after processing further Further Type of Powder Talcom Sweet Regular Processing Costs 200,000 $ 180,000 $ 120,000 $ 8.00 $ 6.00 $ 5.00 $ 90,000 $ 45,000$ 60,000 9.00 7.00 6.00

Explanation / Answer

a) Determine products should be processed further :

a) All products (Talcom, sweet, regular) Should be processed further..

b) Allocate the joint product costs on the basis of physical units:

c) Allocate the joint product costs on the basis of the NRV after further processing:

Talcom Sweet Regular Sale after further processing 9 7 6 Sales at split off poing (8) (6) (5) Incremental revenue per pound 1 1 1 Physical unit 200000 180000 120000 Incremental revenue 200000 180000 120000 Less: Incremental cost (90000) (45000) (60000) Incremental profit 110000 135000 60000

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