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Allocating Joint Costs Using the Net Realizable Value Method A company manufactures three products, L. Ten, Trol, and Piore, from a joint process. Each production
Allocating Joint Costs Using the Net Realizable Value Method A company manufactures three products, L. Ten, Trol, and Piore, from a joint process. Each production run costs $12,900 None of the products can be sold at solito but must be processed further Information on one batch of the three products is as follows: Further Processing Eventual Market Product Gallons Cost per Gallon Price per Gallon L-Ten 3,700 $0.50 52.40 Triol 1.10 5.20 4,200 2,200 Pioze 1.50 6.80 Required: 1. Allocate the joint cost to L-Ten, Triol, and Pioze using the net realizable value method. Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar Joint Cost Grades Allocation L-Ten 2,530 x Pioze Triol 6,196 X 4,174 x Total 12,900 2. What if it cost $2.10 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of joint cost to the three products Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar Joint Cost Grades Allocation Previous Next 2. What if it cost $2.10 to process each gallon of Triol beyond the split-off point? How would that affect the allocation of Joint cost to the three products? Round your allocation percentages to four decimal places and round the allocated costs to the nearest dollar Joint Cost Grades Allocation L-Ten 2,865 X Triol 5,307 x Pioze 4,728 X Total 12,900 Feedback Check My Work 1. The net realizable value method is used when one or more of the joint products cannot be sold at split-off. In this case, a hypothetical market value is constructed so that joint cost allocation can be done as close to the split-off point as possible. Cornerstone 7.10 shows an example of how to allocate using this method. 2. Show the effect of the change in cost using the example on Cornerstone 7.10
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