Below is a question that is giving me trouble. The answers are included below for the problem. I am having trouble understanding how the sales value for each of the chemicals is determined. I am clear on the rest of the problem. I copied and pasted the problem, but it is available from course hero and may be easier to read. Thanks,

Biondi Industries is a manufacturer of chemicals for various purposes. One of the processes used by Biondi produces HTP-3, a chemical used in hot tubs and swimming pools; PST-4, a chemical used in pesticides; and RJ-5, a product that is sold to fertilizer manufacturers. Biondi uses the net-realizable-value method to allocate joint production costs. The ratio of output quantities to input quantities of direct material used in the joint process remains consistent from month to month. Biondi Industries uses FIFO (first-in, first-out) in valuing its finished-goods inventories.

Data regarding Biondi's operations for the month of October are as follows. During this month, Biondi incurred joint production costs of $1,700,000 in the manufacture of HTP-3, PST-4, and RJ-5.

HTP-3

PST-4

RJ-5

Finished goods inventory in gallons (October 1)

18,000

52,000

3,000

October sales in gallons

650,000

325,000

150,000

October production in gallons

700,000

350,000

170,000

Additional processing costs

$

874,000

$

816,000

$

60,000

Final sales value per gallon

$

4.00

$

6.00

$

5.00

1. Determine Biondi Industries' allocation of joint production costs for the month of October.(Round the calculation of "Relative Proportion" to the nearest whole percent. Round your final answers to the nearest dollar amount.)

Sales Value

$ 2,800,000.00

$ 2,100,000.00

$ 850,000.00

Additional Cost per run

$ 874,000.00

$ 816,000.00

$ 60,000.00

NRV

$ 1,926,000.00

$ 1,284,000.00

$ 790,000.00

Total NRV

$ 4,000,000.00

Relative Proportion

0.4815

0.321

0.1975

Allocation of Joint Cost

$ 818,550.00

$ 545,700.00

$ 335,750.00

Total Allocation of Joint Cost

$1,700,000.00

1. Determine the dollar values of the finished-goods inventories for HTP-3, PST-4, and RJ-5 as of October 31.(Round intermediate calculations of "Cost per gallon" to the nearest cent.)

Joint Cost Allocation $818,550.00 $545,700.00 $335,750.00

Addl Production Costs $874,000.00 $816,000.00 $60,000.00

Total Cost $1,692,550.00 $1,361,700.00 $395,750.00

Quantity Produced 700,000 350,000 170,000

Cost Per Gallon Rounded $2.42 $3.89 $2.33

Inventory Valuation

Beginning 18000 52000 3000

Production 700,000 350,000 170,000

Available 718,000 402,000 173,000

Sales 650,000 325,000 150,000

Inventory 68,000 77,000 23,000

Cost per gallon $2.42 $3.89 $2.33

Inventory cost $164,560.00 $299,530.00 $53,590.00

1. Suppose Biondi Industries has a new opportunity to sell PST-4 at the split-off point for $3.80 per gallon. Calculate the per gallon profit (loss) of processing further PST-4.(Round your answer to 2 decimal places.)

Per gallon sales value beyond the split-off point

$6.00

Per gallon sales value at the split-off point

3.80

Incremental sales value

$2.20

Additional processing costs per gallon

($816,000 350,000 gallons)

2.33

(rounded)

Per gallon gain (loss) of further processing

$ (.13

)

1. Should the company sell PST-4 at the split-off point or continue to process this product further?

Biondi should sell at the split off point as incremental sales is less than the profit at split-off.