Northern Company processes 100 gallons of raw materials into 75 gallons of product GS-50 and 25 gallons of GS-80. GS-50 is further processed into 50 gallons of product GS-505 at a cost of $6,200, and GS-80 is processed into 50 gallons of product GS-805 at a cost of $4,175. The production process starts at point 1. A total of $20,000 in joint manufacturing costs are incurred in reaching point 2. Point 2 is the split-off point of the process that manufactures GS-50 and GS-80. At this point, GS-50 can be sold for $550 a gallon, and GS-80 can be sold for $110 a gallon. The process is completed at point 3—products GS-505 and GS-805 have a sales price of $550 a gallon and $190 a gallon, respectively. Required: Allocate the joint product costs and then compute the cost per unit using each of the following methods: (1) physical measure, (2) sales value at split-off, and (3) net realizable value. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) GS-50 Cost per Unit GS-80 Cost per Unit Total Cost per Unit 1) Physical Measure 2) Sales Value at Split-off 3) Net Realizable Value
Northern Company processes 100 gallons of raw materials into 75 gallons of product GS-50 and 25 gallons of GS-80. GS-50 is further processed into 50 gallons of product GS-505 at a cost of $6,200, and GS-80 is processed into 50 gallons of product GS-805 at a cost of $4,175.
The production process starts at point 1. A total of $20,000 in joint
Required:
Allocate the joint product costs and then compute the cost per unit using each of the following methods: (1) physical measure, (2) sales value at split-off, and (3) net realizable value. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
| GS-50 Cost per Unit | GS-80 Cost per Unit | Total Cost per Unit | ||
| 1) | Physical Measure | |||
| 2) | Sales Value at Split-off | |||
| 3) | Net Realizable Value |
SOLUTION
PRODUCT COST REFERS TO THE TOTAL COSTS INVOLVED IN THE MAKING A PRODUCT AND GETTING IT READY FOR SALE.
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