Chapter 11, Problem 72P

 Joint Costing in a Process Costing Context: Estimated Net Realizable Value Method

 West Coast Designs produces three products: super, deluxe, and generic. Super and deluxe are its main products; generic is a by-product of super. Information on the past month’s production processes follows:

• In Department A, 330,000 units of the raw material X-1 are processed at a total cost of $783,000. After processing in Department A, 60 percent of the units are transferred to Department B, and 40 percent of the units (now unprocessed deluxe) are transferred to Department C.
• In Department B, the materials received from Department A are processed at an additional cost of $228,000. Seventy percent of the units become super and are transferred to Department D. The remaining 30 percent emerge as generic and are sold at $4.20 per unit. The additional processing costs to make generic salable are $48,600.
• In Department C, deluxe is processed at an additional cost of $990,000. A normal loss of 10 percent of the units of good output of deluxe occurs in this department. The remaining good output is then sold for $24 per unit.
• In Department D, super is processed at an additional cost of $98,880. After this processing, super can be sold for $10 per unit.

Required

 Prepare a schedule showing the allocation of the $783,000 joint cost to super and deluxe using the estimated net realizable value approach. Revenue from the sale of by-products should be credited to the manufacturing costs of the related main product (method 1 in the text).