Net Realizable Value: The Harumby Manufacturing Company produces three products by a joint production process. Raw materials are put into production in department A. and at the end of processing in this department, three products appear. Product X is immediately sold at the split-off point, with no further processing. Products Y and Z require further processing before they are sold. Product Y is processed in department B, and product Z is processed in department C. The company uses the net realizable value method of allocating joint production costs. Following is a summary of costs and other data for the quarter ended September 30.

There were no inventories on hand at the beginning of the quarter, or July 1 . There was no raw material on hand at September 30. All the units on hand at the end of the quarter were fully complete as to processing.

Required:

a. Determine the following amounts for each product: (1) estimated net realizable value as used for allocating joint costs. (2) joint costs allocated. (3) cost of goods sold, and (4) finished-goods inventory costs. September 30.

b. Assume that the entire output of product X could be processed further at an additional cost of $2.00 per pound and then sold at a price of $4.30 per pound. What is the effect on operating income if all the product X output for the quarter had been processed further and sold, rather than all being sold at the split-off point?

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Products X Y Z Pounds sold 20,000 60,000 80,000 Pounds on hand at September 30 40,000 Sales revenues $30,000 -0- $162,000 40,000 $283,500 Departments A B Raw material cost Direct labor cost Manufacturing overhead $112,000 -0- 48,000 80,900 -0- 202,000 20,000 21,100 73,250