Wyalusing Chemicals uses a joint process to produce MJ-4, a chemical used in the manufacture of paints and varnishes; HD-10, a chemical used in household cleaning products; and FT-5, a by-product that is sold to fertilizer manufacturers. Joint production costs are allocated to the main products on the basis of net realizable value. The by-product is inventoried at its net realizable value, and this value is used to reduce the joint production cost before allocation to the main products.

During the month of November. Wyalusing incurred joint production costs of $3,136,000 . Data regarding Wyalusing's November operations are as follows:

Required:
1. Define the terms joint costs and split-offpoint.
2. Determine the dollar values of Wyalusing Chemicals' finished-goods inventories on November 30 for MJ-4 and HD-10.
3. Wyalusing Chemicals has an opportunity to sell HD-10 for its sales value at the split-off point.
Determine if management should sell HD- 1 at the split-off point or continue to process it further.

Transcribed Image Text:

MJ-4 HD-10 FT-5 November production in gallons. Sales value per gallon at split-off Separable processing cost... 600,000 320,000 85,000 None $6.00 $1.80 $1,440,000 $1,840,000 None Final sales value per gallon.... $8.00 $12.75 None Finished-goods inventory in gallons on November 30 (all produced during November).. 9,000 26,000 1,500 *Disposal costs of $20 per gallon will be incurred in order to sell the by-product.