Allocating common costs to joint products by two methods—relative sales value and adjusted relative sales value. The Black Rock Corporation has a single manufacturing process that results in two products. Monex, a powder, has a sales price of $4 per pound. Tegor, a liquid, has a sales price of $10 per gallon.

During January 19X4, total manufacturing costs in the final department were

$98,000. Production for the month consisted of 30,000 pounds of Monex and 12,000 gallons of Tegor. Because of its volatile nature, Tegor must be carefully packed. The costs of packing and selling Tegor are $3.50 per gallon. The costs of packing and selling Monex are $.50 per pound.

Instructions 1. Compute the cost to be allocated to each unit of each product for January 19X1.

a. The relative sales value method is used to allocate costs.

b. The adjusted relative sales value method is used to allocate costs.
2. Briefly compare the effects of the two methods of allocating costs.