Net realizable value cost allocation method, further process decision. (W. Crum)

The Tuscania Company crushes and refines mineral ore into three products in a joint cost operation. Costs and production for 2007 were as follows:

Department 1, at initial joint costs of $504,000, produces 20,000 kilograms ofAlco, 60,000 kilograms of Devo, 100,000 kilograms ofHolo.

Department 2 processes Alco further at a cost of $120,000.

Department 3 processes Devo further at a cost of $240,000.

Results for 2007 are Alco: 20,000 kilograms completed; 19,000 kilograms sold for $24 per kilogram; ending inventory, 1,000 kilograms.
Devo: 60,000 kilograms completed; 59,000 kilograms sold for $7.20 per kilogram; ending inventory, 1,000 kilograms.
Holo: 100,000 kilograms completed; 99,000 kilograms sold for $1.20 per kilogram;
ending inventory, 1,000 kilograms; Holo required no further processing.
Required 1. Use the estimated NRV method to allocate the joint costs of the three products. Compute the total costs and unit costs of ending inventories.
2. Compute the individual gross margin percentages ofthe three products.
3. Suppose Tiscania receives an offer to sell all its Devo product for a price of $2.40 per kilogram at the splitoff point before going through Department 3, just as it comes off the ,—. production line in Department 1. Using last year’s figures, would Tuscania be better off by 1 selling Devo that way or processing it through Department 3 and selling it? Show computa¬
tions to support your answer. Disregard all other factors not mentioned in the problem.