(Joint cost allocation; scrap) Ahrginia Textiles produces terrycloth products for hotels. The company buys the fabric in 60-inch-width bolts. In the first process, the fabric is set up, cut, and separated into pieces. Setup can either be for robes and bath towels or for hand towels and washcloths.
During June, the company set up and cut 3,000 robes and 6,000 bath towels. Because of the irregular pattern of the robes, scrap is produced in the process and is sold to various institutions (prisons, hospitals, etc.) for rags at $1.25 per pound. June production and cost data for Virginia Textiles are as follows:

Virginia Textiles assigns the joint processing cost to the robes and towels based on an approximated net realizable value at split-off. The final selling prices for robes and bath towels are $20 and $11 per unit, respectively. Costs after split-off are $8.40 and $2.30, respectively, for the robes and the towels. The selling price of the scrap is treated as a reduction of joint cost.

a. Determine the joint cost to be allocated to the joint products for June. Pre¬ pare the journal entry necessary at the point of split-off.

b. How much joint cost is allocated to the robes in June? To the bath towels?

c. What amount of cost for robes is transferred to Finished Goods Inventory for June? What amount of cost for towels is transferred to Finished Goods Inventory for June?LO1

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Fabric used, 12,500 feet at $1.75 per foot Labor, joint process Overhead, joint process Pounds of scrap produced $21,875 $ 5,000 $ 4,900 1,800