Alternative accounting treatment of by-products Tineley Chemicals, Inc. produces Solvoe and Solvine in a joint production process. In addition to these two joint products, a by-product, Solve-X, separates from the main production process shortly before the joint-product split-off point. The last batch of this product group yielded 4,000 gallons of Solvoe, 6,000 gallons of Solvine, and 3,000 pounds of Solve-X. The selling price is $6.00 per gallon for Solvoe and $9.00 per gallon for Solvine. The price of the by-product is $2.50 per pound. Joint production costs were direct materials $30,000, direct labor, $15,000, and manufacturing overhead $10,000. Solvoe is sold at split-off, and Solvine required $9,000 in additional processing costs after the split-off point. The by-product requires no additional processing costs after separating from the main products, and there is a 10 percent marketing and distribution cost for the by-product. Tineley Chemicals uses the physical units method of accounting for joint costs.

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REQUIRED a. Record all necessary journal entries associated with the transfer of by-products to inventory and the sale of the by-products assuming the net realizable value method is used. b. Record the same events as in part a using the miscellaneous income method of accounting for by-products. c. Compute the unit costs of Solvoe and Solvine using the by-product accounting method from part a. d. Compute the unit costs of Solvoe and Solvine using the by-product accounting method from part b. Computer requirements The market value of the by-product Solve-X fluctuates significantly. Compute the answers to parts c and d again assuming the selling price of Solve-X is: e. $1.00. f. $4.00. g. $5.00. h. $6.00.