Gunston Processing produces two products, ALT-1 and ALT-2, from a batch using a single raw material, ALT-0. Both products require further processing before they be can be sold. A batch of ALT-1 can be sold for $150,000 after processing costs of $30,000. A batch of ALT-2 can be sold for $240,000 after further processing. The cost of ALT-0 is $200,000 for a batch. Using the estimated net realizable value method, a joint cost of $120,000 was allocated to ALT-2 for a batch.

Gunston Processing produces two products, ALT-1 and ALT-2, from a batch using a single raw material, ALT-0. Both products require further processing before they be can be sold. A batch of ALT-1 can be sold for $150,000 after processing costs of $30,000. A batch of ALT-2 can be sold for $240,000 after further processing. The cost of ALT-0 is $200,000 for a batch. Using the estimated net realizable value method, a joint cost of $120,000 was allocated to ALT-2 for a batch.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Gunston Processing produces two products, ALT-1 and ALT-2, from a batch using a single raw material, ALT-0. Both products require further processing before they be can be sold. A batch of ALT-1 can be sold for $150,750 after processing costs of $33,000. A batch of ALT-2 can be sold for $240,300 after further processing. The cost of ALT-0 is $200,000 for a batch. Using the estimated net realizable value method, a joint cost of $120,000 was allocated to ALT-2 for a batch. Required: Compute the separable processing cost for a batch of ALT-2. Note: Do not round intermediate calculations.
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Zycon has produced 10,000 units of partially finished Product A. These units cost $15,000 to produce, and they can be sold to another manufacturer for $20,000. Instead, Zycon can process the units further and produce finished Products X, Y, and Z. Processing further will cost an additional $22,000 and will yield total revenues of $35,000. Place an X in the appropriate column to identify whether the item is relevant or irrelevant to the sell or process further decision. Item Relevant Not Relevant a. $15,000 cost already incurred to produce b. $20,000 selling price c. $22,000 additional processing costs d. $35,000 revenues from processing
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