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Joint Costing problem: O’Mally Corporation makes different types of fertilizers and uses a joint process that...

  1. Joint Costing problem: O’Mally Corporation makes different types of fertilizers and uses a joint process that costs $16,000 for inputs and processing each batch of chemicals. Processing one batch results in the following joint outputs:

Quantity

Sales price

Further processing

Sales price after

Product

in liters

at split off

costs

further processing

X

         1,000,000

.09 per liter

30,000

.11 per liter

Y

             500,000

.05 per liter

20,000

.10 per liter

a. What is the NRV for each of the products under either scenario? (Sell or process further)

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Answer #1
Quantity Sales price NRV at Split off Further processing Sales price after NRV after Further processing
Product in liters at split off costs further processing
X          1,000,000 .09 per liter 1,000,000 x 0.09 = 90,000 30,000 .11 per liter 1,000,000 x 0.11 = 110,000
Y              500,000 .05 per liter 500,000 x 0.05 = 25,000 20,000 .10 per liter 500,000 x 0.10 = 50,000

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