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Deakin Chemical generates 4 solvents (B, C, D, and E) simultaneously from the joint production in Department A. In 2020, Department A consumes $56,000 direct

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Deakin Chemical generates 4 solvents (B, C, D, and E) simultaneously from the joint production in Department A. In 2020, Department A consumes $56,000 direct material and $24,000 direct labour, the manufacturing overhead are $10,000. Solvent B is the by-product. The firm deducts the estimated NRV of by-product (net realizable value) from the joint cost of solvents C, D, and E. The following is the cost and revenue information for the output of Department A in 2020: Sales price per barrel at split-off point Further processing Barrels cost per Final sales price per barrel barrel B - $2.00 $3.50 c 500 10,000 14,000 20,000 D $8.00 $12.50 $4.00 $8.00 $19.00 E Currently, by-product solvent B requires further processing before it could be sold to customers. Solvents and E can be sold directly at the split-off point, without further processing. Solvent D can be sold directly at the split-off point, alternatively, it could be processed further so that it could be sold to outside customers at a higher sales price. The further processing of solvent D requires 14,000 barrels of solvent F that can be purchased at $4.50 per barrel. The additional labour and overhead cost in the further processing are $3.50 for each barrel of Solvent D. Thus, the further processing cost of solvent D is $8.00 per barrel. The physical amount of Solvent D does not change in the further processing Required a) Calculate the joint cost to be allocated among solvents C, D, and E. (4 marks) b) should Deakin Chemical further process solvent D? Why? Use your computation to support your answer. (6 marks) c) Allocate the joint cost among solvents C, D, and E based on the sales value at the split-off point. (6 marks) d) Besides the sale-value at split-off point method, physical measure method is also used to allocate joint costs. Please briefly discuss one advantage and one disadvantage for the physical measure method and the sales value at split-off point method, respectively. (8 marks)

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