Alpine Labs produces a drug used for the treatment of arthritis. The drug is produced in batches.

In March, Alpine,which had no opening inventory, processed one batch of chemicals. It sold 2,300 gallons of product for human use and 200 gallons of the veterinarian product. Alpine uses the net realizable value method for allocating joint production costs.

Chemicals costing $45,000 are mixed and heated, then a unique separation process then extracts the drug from the mixture. A batch yields a total of 2,700 gallons of the chemicals. The first 2,400 gallons are sold for human use while the last 300 gallons, which contain impurities, are sold to veterinarians. The costs of mixing, heating, and extracting the drug amount to $142,500 per batch. The output sold for human use is pasteurized at a total cost of $132,000 and is sold for $620 per gallon. The product sold to veterinarians is irradiated at a cost of $25 per gallon and is sold for $490 per gallon.

Requirements:

1.	How much in joint costs does Alpine allocate to each product?
2.	Compute the cost of ending inventory for each of Alpine's products.
3.	If Alpine were to use the constant gross-margin percentage NRV method instead, how would it allocate its joint costs?
4.	Calculate the gross margin on the sale of the product for human use in March under the constant gross-margin percentage NRV method.
5.	Suppose that the separation process also yields 350 pints of a toxic byproduct. Alpine currently pays a hauling company $5,500 to dispose of this byproduct. Alpine is contacted by a firm interested in purchasing a modified form of this byproduct for a total price of $6,800. Alpine estimates that it will cost about $34 per pint to do the required modification. Should Alpine accept the offer?