Joint costs and byproducts. (W. Crum) The Caldwell Company processes an ore in

/Department 1, out ofwhich come three products, L, W, and X. Product L is processed further

—through Department 2. Product W is sold without further processing. Product X is considered a byproduct and is processed further through Department 3. Costs in Department 1 are $960,000 in total; Department 2 costs are $120,000; and Department 3 costs are $60,000.

Processing 600,000 kilograms in Department 1 results in 50,000 kilograms of product L, 300,000 kilograms of product W, and 100,000 kilograms of product X.

Product L sells for $12 per kilogram, Product W sells for $2.40 per kilogram, and Product X sells for $3.60 per kilogram. The company wants to make a gross margin of 10%

ofsales on product X and also allow 25% for marketing costs on product X.

Required 1. Compute unit costs per kilogram for products L, W, and X, treating X as a byproduct. Use the estimated NRV method for allocating joint costs. Deduct the estimated NRV of the byproduct produced from the joint cost of products L and WT.

2. Compute unit costs per kilogram for products L, W, and X, treating all three as joint products and allocating costs by the estimated NRV method.