A company uses a single process to produce three joint products, E, M, and H. Raw materials in the amount of 100,000 gallons are processed in each batch to yield 40,000 gallons of E, 30,000 gallons of M, and 20,000 gallons of H. The joint costs of processing a batch of raw materials are:

After split-off, product \(\mathrm{E}\) can be sold for \(\$ 1.50\) per gallon. Products \(\mathrm{M}\) and \(\mathrm{H}\) must be processed further before they can be sold. The separate processing costs are \(\$ 1.50 \mathrm{per}\) gallon for product \(M\) and \(\$ 2.00\) per gallon for product \(H\). Product \(M\) can then be sold for \(\$ 3.00\) per gallon and product \(\mathrm{H}\) for \(\$ 4.25\) per gallon.
During March, the company processed 100,000 gallons of raw materials. There were no inventories of finished product on hand on March 1. March sales were 30,000 gallons of E, 28,000 gallons of \(\mathrm{M}\), and 16,000 gallons of \(\mathrm{H}\).
The company uses the net realizable value method for allocating joint costs.
Required:

(a) Prepare a schedule showing the allocation of the \(\$ 135,000\) joint cost between products E, M, and H. Clearly label your answer.

(b) Prepare a statement of gross margin for products E, M, and \(\mathrm{H}\) for March.

(c) Product \(\mathrm{E}\) can be processed further into product Super \(\mathrm{E}\) by additional processing which costs \(\$ 14,000.35,000\) gallons of Super E can be produced per batch of 100,000 gallons of raw materials. Super \(\mathrm{E}\) can be sold for \(\$ 2.00\) per gallon. Will the company be better off by producing and selling Super E rather than product E? Show computations to support your answer.

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Materials (100,000 gallons) Conversion Costs $60,000 75,000