(By-products and cost allocation) Dales-Schumantions Productions produced the movies Rare Debits & Credits and Rare Debits & Credits: The Sequel from the same original footage that cost $16,000,000. The company, therefore, considers these two movies as joint products. Because of the superb anima- tion in postproduction, however, the sequel was significantly more expen¬ sive to produce but was much better received at the box office.

The company also generated what it considers by-product revenue from admissions paid by numerous fans touring the movie production set. Dales- Schumantions accounts for this revenue as a reduction in joint cost before making allocations to the movie output.

The following information pertains to the two movies: LO1.

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Products Rare Debits & Credits Rare Debits & Credits: The Sequel Studio tours Total Receipts $ 8,000,000 54,000,000 700,000 Separate Costs $ 4,800,000 37,200,000 380,000 a. If joint cost is allocated based on net realizable value, how much of the joint cost is allocated to each movie? b. How much profit was generated by each movie?