Joint Products, Inc.
Joint Products, Inc., produces two joint products, X and V, using a common input. These are produced in batches. The common input costs $8,000 per batch. To produce the final products (X and V), additional processing costs beyond the split-off point must be incurred. There are no beginning inventories. The accompanying data summarize the operations.
| Products | |
| X | V |
Quantities produced per batch | 200 lbs. | 400 lbs. |
Additional processing costs per batch beyond split-off | SI.800 | $3,400 |
Unit selling prices of completely processed products | $4Q/lb. | $ 10/lb. |
Ending inventory | 2.000 lbs. | 1.000 lbs. |
Required:
a. Compute the full cost of the ending inventory using net realizable value to allocate joint cost.
b. If the selling prices at the split-off point (before further processing) are $35 and $1 per pound of X and V, respectively, what should the firm do regarding further processing? Show calculations.
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