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A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs $12,900. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as follows: Required: 1. Allocate the joint cost to L-Ten, Triol, and Pioze using the net realizable value method. (Round the percentages to four significant digits. Round all cost allocations to the nearest dollar.) 2. What if it cost $2 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of joint cost to the three products?

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Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

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BuyFindarrow_forward

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
Chapter 7, Problem 10CE
Textbook Problem
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A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each production run costs $12,900. None of the products can be sold at split-off, but must be processed further. Information on one batch of the three products is as follows:

Chapter 7, Problem 10CE, A company manufactures three products, L-Ten, Triol, and Pioze, from a joint process. Each

Required:

  1. 1. Allocate the joint cost to L-Ten, Triol, and Pioze using the net realizable value method. (Round the percentages to four significant digits. Round all cost allocations to the nearest dollar.)
  2. 2. What if it cost $2 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of joint cost to the three products?

1.

To determine

Allocate the joint costs suing the net realizable value method.

Explanation of Solution

Net realizable value method: Net realizable value method is used if there is no ready market price for the individual products at the split-off point. In this case, hypothetical sales value is obtained for each joint product to approximate the sales value at split-off...

2.

To determine

State the manner in which the allocation of joint cost will be affected if it cost $2 to process each gallon of Triol beyond the split-off point.

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Chapter 7 Solutions

Cornerstones of Cost Management (Cornerstones Series)
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