Dover Studios shot hundreds of hours of footage that cost $20,000,000. From this footage, the company produced two movies:

Greedy CEOs and Greedy CEOs: The Sequel. The sequel used better sound effects than the original and was significantly more expensive to produce. However, audiences seemed to be more interested in the careers of Erin Sacks and Henry Whalen, discussed in the sequel, than the CEOs portrayed in the original movie and the sequel was much better received at the box office.

Dover Studios also generated revenue from admissions paid by numerous forensic accountants who wanted to tour the movie production set. The company accounted for this revenue as a by-product and used it to reduce joint cost before making allocations to the two feature-length movies.

The following information pertains to the two movies:

a. If joint cost is allocated based on net realizable value, how much of the joint cost is allocated to each movie?
b. Based on your allocations in (a), how much profit was generated by eachmovie?

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Products Greedy CEOs Greedy CEOs: The Sequel Studio tours Total Receipts $10,000,000 58,000,000 Separate Costs 6800,000 41,200,000 800,000 480,000