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3 years ago

Allocating Joint Costs Using the Net Realizable Value Method

Business

1 answer:

Ilya [14]3 years ago

7 0

Answer:

Allocating Joint Costs Using the Net Realizable Value Method

1. Joint Cost

Grades Allocation

L-Ten $1,850

Triol 6,569

Pioze 3,881

Total $12,300

2. Joint Cost

Grades Allocation

L-Ten $2,112

Triol 5,756

Pioze 4,432

Total $12,300

Explanation:

a) Data and Calculations:

Cost of each production run = $12,300

Product Gallons Further Processing Eventual Market Net Realizable

Cost per Gallon Price per Gallon Value

L-Ten 3,200 $0.70 $2.10 $4,480

Triol 3,700 1.10 5.40 15,910

Pioze 2,000 1.50 6.20 9,400

Total 8,900 $29,790

Allocation of join cost:

L-Ten = $4,480/$29,790 * $12,300 = $1,850

Triol = $15,910/$29,790 * $12,300 = $6,569

Pioze = $9,400/$29,790 * $12,300 = $3,881

Product Gallons Further Processing Eventual Market Net Realizable

Cost per Gallon Price per Gallon Value

L-Ten 3,200 $0.70 $2.10 $4,480

Triol 3,700 2.10 5.40 12,210

Pioze 2,000 1.50 6.20 9,400

Total 8,900 $26,090

Allocation of join cost:

L-Ten = $4,480/$26,090 * $12,300 = $2,112

Triol = $12,210/$26,090 * $12,300 = $5,756

Pioze = $9,400/$26,090 * $12,300 = $4,432

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