Question

The Tempura Spirits Company produces two products methanol (wood alcohol) and turpentine-by a joint process. Joint costs amount to $124,000 per batch of output. Each batch fotais 0,500 gallons: 25% methanol and 75% turpentine. Both products are processed further without gain or loss in volume. Separable processing costs are methanol, S4 per gallon, and turpentine, $2 per gallon. Methanol sells for $22 per gallon. Turpentine sells for $16 per gallon Read the requirements Requirement 2. If joint costs are allocated on an NRV basis, how much of the joint costs will be allocated to methanol and to turpentine? (Round the weights to five decimal places.) Methanol Turpentine Total Final sales value of total production Deduct separable costs NRV at splitoff point Weighting Joint costs allocated e t Accenninnendienreihen

Answer 1

Methanol Total Turpentine Final sales value of total production, (2375 *$22); (7125 *$16) $52,250 $114,000 $166,250 (a) Deduct separable costs, (2375 $14,250 $4); (7125* $2) $9,500 $23,750 (b) Net realizable value at splitoff point (a-b) $42,750 $99,750 $142,500 Weighting, ($42750/ $142500); ($99750/ $142500) 30% 70% Joint costs allocated, ($124000*30%); ($124000* 70%) $37,200 $86,800 $124,000 working methanol 9500*25% Turpentine= 950075% = 7125