Arkansas Corporation manufactures liquid chemicals A and B from a joint process. It allocates joint costs on the basis of sales value at split-off. Processing 5,000 gallons of product A and 1,600 gallons of product B to the split-off point costs $5,900. The sales value at split-off is $2.00 per gallon for product A and $25.00 per gallon for product B. Product B requires additional separable processing beyond the split-off point at a cost of $2.50 per gallon before it can be sold at a price of $34 per gallon. Required: What is the company's cost to produce 1,600 gallons of product B? Product cost

Arkansas Corporation manufactures liquid chemicals A and B from a joint process. It allocates joint costs on the basis of sales value at split-off. Processing 5,000 gallons of product A and 1,600 gallons of product B to the split-off point costs $5,900. The sales value at split-off is $2.00 per gallon for product A and $25.00 per gallon for product B. Product B requires additional separable processing beyond the split-off point at a cost of $2.50 per gallon before it can be sold at a price of $34 per gallon. Required: What is the company's cost to produce 1,600 gallons of product B? Product cost

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 66P: Sell at Split-Off or Process Further Eunice Company produces two products from a joint process....

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Your Corporation produces products P, Q, and R from a joint production process. Each product may be sold at the split-off point or processed further. Joint production costs of $80,000 per year are allocated to the products based on the relative number of units produced. Which products should be processed further? P Q R Units produced 3,000 6,000 1,000 Selling price at split off $37,500 $46,500 $15,500 Cost to process further $10,000 $30,000 $5,000 Selling price after processing $50,000 $65,000 $25,000 a. P, Q and R b. P and Q c. Just P d. P and R e. Just Q
P12-5 Dallas Company manufactures two joint products: X and Y. Total joint production costs amounted to P100,000. The two products sell for P12 and P6 per unit, respectively. In order to sell this two process at much higher price, Dallas can process them further for additional cost of P25,000. Relevant data are shown below: Units Additional Adjusted Sales Value Produced 10,000 30,000 Products Selling Price Processing Costs P16,200 P12.00 P18.00 Y 6.00 8,800 P25,000 10.00 40,000 Required: Allocate the joint costs to four products using: Quantitative or physical unit method а. b. Sales value at split-off method С. Net realizable value (or adjusted sales value) method
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