Chapter 16, Problem 16.42P

1.

To determine

Net Realizable Value (NRV) Method:

NRV method is a method of joint cost allocation which takes into consideration additional costs required to be incurred in the further processing of the products.

Formula to allocate joint cost as per NRV method:

$\text{Cost allocated to joint product}=\frac{\text{NRV of product}}{\text{Total NRV of production}}\times \text{Total joint cost}$

Where,

• $\text{NRV}=\text{Sales value}-\text{Cost of further process or sell}$

To compute: Joint cost allocation as per NRV method.

2.

To determine

To examine: Products to be sold at split off point or processed further.