The Palm Company produces two products—coconut and coconut water—by a joint process. Joint costs amount to $14,000 per batch of output. Each batch totals 4,000 pounds of coconut and 6,000 pounds of coconut water. Both products are processed further without a gain or loss in volume. Separable processing costs for the coconut are $1.47 per pound and for the coconut water are $2.02 per pound. Coconut sells for $6.30 per pound and the coconut water sells for $5.80 per pound.

Required

1. How much of the joint costs per batch will be allocated to coconut and to coconut water, assuming that  joint costs are allocated based on the number of pounds at the split off point?

2. If joint costs are allocated on an NRV basis, how much of the joint costs will be allocated to the coconut and to the coconut water?

3. Prepare product-line income statements per batch for requirements 1 and 2. Assume no beginning or ending inventories of either product.

4. The company has the option of processing the coconut further and producing coconut slices. The selling price of the coconut slices would be $8 per pound after incurring additional processing costs of $0.3875 per pound. Assuming no other changes in cost, what is the joint cost allocated to coconut slices (using the NRV method)? Should the company produce the coconut slices? Show your computations.