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 $7,250, and GS-80 is processed into 50 gallons of product GS-805 at a cost of $5,750. 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 $725 a gallon, and GS-80 can be sold for $145 a gallon. The process is completed at point 3-products GS-505 and GS-805 have a sales price of $585 a gallon and $225 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.) (1) Physical measure (2) Sales value at split-off (3) Net realizable value GS-50 cost per unit $ $ GS-80 cost Total cost per unit per unit 15,000 $ 54,375 $ GS-505 cost per unit $ 22,000 5,000 $ 3,625 $ GS-805 cost per unit $ 5,500 20,000 58,000 Total cost per unit $27,500
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 $7,250, and GS-80 is processed into 50 gallons of product GS-805 at a cost of $5,750. 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 $725 a gallon, and GS-80 can be sold for $145 a gallon. The process is completed at point 3-products GS-505 and GS-805 have a sales price of $585 a gallon and $225 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.) (1) Physical measure (2) Sales value at split-off (3) Net realizable value GS-50 cost per unit $ $ GS-80 cost Total cost per unit per unit 15,000 $ 54,375 $ GS-505 cost per unit $ 22,000 5,000 $ 3,625 $ GS-805 cost per unit $ 5,500 20,000 58,000 Total cost per unit $27,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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 $7,250, and GS-80 is processed into 50 gallons of product GS-805 at a cost
of $5,750.
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 $725 a gallon, and GS-80 can be
sold for $145 a gallon. The process is completed at point 3-products GS-505 and GS-805 have a sales price of $585 a gallon and
$225 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.)
(1) Physical measure
(2) Sales value at split-off
(3) Net realizable value
GS-50 cost GS-80 cost
per unit
per unit
$
$
GS-505 cost
per unit
22,000
$
15,000 $
54,375 $
3
5,000
3,625
GS-805 cost
per unit
$
5,500
Total cost
per unit
$
20,000
58,000
Total cost
per unit
$27,500
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