Earl’s Hurricane Lamp oil company produces both A-1 Fancy and B Grade Oil. There are approximately $9000 in joint costs that Earl may allocate using the relative sales value at splitoff or the net realizable value approach. Before splitoff, A-1 sells for $20,000 while B grade sells for $40,000.After an additional investment of $10,000 after splitoff,$3000 for B grade and $7000 for A-1, both the products sell for $50,000.What is the difference in allocated costs for the A-1 product assuming applications of the net realizable value at splitoff approach? A-1 Fancy has $1,300 more joint costs allocated to it under the net realizable value approach than the sales at splitoff approach. A-1 Fancy has $1,300 less joint costs allocated to it under the net realizable value approach than the sales at splitoff approach. A-1 Fancy has $1,500 more joint costs allocated to it under the net realizable value approach than the sales at splitoff approach. A-1 Fancy has $1,500 less joint costs allocated to it under the net realizable value approach than the sales at splitoff approach.
Earl’s Hurricane Lamp oil company produces both A-1 Fancy and B Grade Oil. There are approximately $9000 in joint costs that Earl may allocate using the relative sales value at splitoff or the net realizable value approach. Before splitoff, A-1 sells for $20,000 while B grade sells for $40,000.After an additional investment of $10,000 after splitoff,$3000 for B grade and $7000 for A-1, both the products sell for $50,000.What is the difference in allocated costs for the A-1 product assuming applications of the net realizable value at splitoff approach? A-1 Fancy has $1,300 more joint costs allocated to it under the net realizable value approach than the sales at splitoff approach. A-1 Fancy has $1,300 less joint costs allocated to it under the net realizable value approach than the sales at splitoff approach. A-1 Fancy has $1,500 more joint costs allocated to it under the net realizable value approach than the sales at splitoff approach. A-1 Fancy has $1,500 less joint costs allocated to it under the net realizable value approach than the sales at splitoff approach.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Earl’s Hurricane Lamp oil company produces both A-1 Fancy and B Grade Oil. There are approximately $9000 in joint costs that Earl may allocate using the relative sales value at splitoff or the net realizable value approach. Before splitoff, A-1 sells for $20,000 while B grade sells for $40,000.After an additional investment of $10,000 after splitoff,$3000 for B grade and $7000 for A-1, both the products sell for $50,000.What is the difference in allocated costs for the A-1 product assuming applications of the net realizable value at splitoff approach?
- A-1 Fancy has $1,300 more joint costs allocated to it under the net realizable value approach than the sales at splitoff approach.
- A-1 Fancy has $1,300 less joint costs allocated to it under the net realizable value approach than the sales at splitoff approach.
- A-1 Fancy has $1,500 more joint costs allocated to it under the net realizable value approach than the sales at splitoff approach.
- A-1 Fancy has $1,500 less joint costs allocated to it under the net realizable value approach than the sales at splitoff approach.
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