Joint Cost Allocations: The Roving Eye Cosmetics Company buys bulk flowers and processes them into perfumes in a two-stage process. Their highest-grade perfume, Seduction, and a residue that is processed into a medium-grade perfume called Romance, come from a certain mix of petals. In July, the company used 25,000 pounds of petals. Costs involved in the first stage-which is a joint process, known as reduction, reducing the petals to Seduction and the residue-were as follows:

1. $200,000 direct materials.
2. $110,000 direct labor.
3. $90,000 overhead and other costs.

The additional costs of producing Romance via the second pressing were as follows:

1. $22,000 direct materials.
2. $50,000 direct labor.
3. $40,000 overhead and other costs.

At the end of the month, total completed production equaled 5,000 ounces of Seduction and 28,000 ounces of Romance. In addition, 2,500 ounces of Seduction and 12.500 ounces of Romance had just completed reduction. There was no beginning inventory on July 1. There are no uncompleted units in the second pressing stage.

Packaging costs incurred for each product as completed were $40,000 for Seduction and $161,000 for Romance. The sales price of Seduction is $90 an ounce; Romance sells for $31.50 per ounce.

a. Allocate joint costs using the estimated net realizable value method.

b. Allocate the joint costs using the physical units method. Round all percentages to one decimal place.

c. Are there any problems in using the physical units method in this case?

d. Assume that Roving Eye can sell the squeezed petals from the reduction process to greenhouses for use as fertilizer. In July, there were 12,000 pounds of squeezed petals left over that sold for $.75 per pound. The squeezed petals are a by-product of reduction. With this new information, answer parts a and b.