(joint cost allocation; by-product) Muriel Orange Company produces orange juice and orange marmalade from a joint process. In addition, second-stage processing of the marmalade creates a residue mixture of orange pulp as a by-product. The company sells pulp for $0.08 per gallon. Expenses to dis¬ tribute pulp total $110.

In May 2006, 140,000 pounds of oranges were processed in Department 1; the cost of that input was $44,200. An additional $33,700 was spent on conversion costs. There were 56,000 gallons of output from Department 1. Of that output, 30 percent was transferred as orange juice to Department 2, and 70 percent of the output was transferred to Department 3. Of the input going to Department 3, 20 percent resulted in pulp and 80 percent resulted in marmalade. Joint cost is allocated to orange juice and marmalade on the basis of approximated net realizable values at split-off.

The orange juice in Department 2 was processed at a total cost of $9,620; the marmalade in Department 3 was processed at a total cost of $6,450. The net realizable value of pulp is accounted for as a reduction in the separate processing costs in Department 3- Selling prices per gallon are $5.25 and $3.45 for orange juice and marmalade, respectively.

a. Diagram this problem similar to those in Exhibits 11^ and 11-9.

b. How many gallons leaving Department 1 were sent to Department 2 for further processing? To Department 3?

C. How many gallons left Department 3 as pulp? As marmalade?

d. What is the net realizable value of pulp?

e. What is the total approximated net realizable value of the orange juice? The marmalade?

f. What amount of joint cost is assigned to each main product?

g. If 85 percent of the final output of each main product was sold during May and Muriel Orange Company had no beginning inventory of either product, what is the value of the ending inventory of orange juice and marmalade? LO1.