Dee Co produces three liquid pharmaceuticals L1, L2 and L3 from a common process. They must be produced and sold together. 1,000 litres of each of the three products are produced, incurring common process costs of $20,000 in total. The selling prices per litre for the three products at the end of the common process are: Selling price per litre L1 $6; L2 $5; L3 $8 Alternatively, all three liquids can be processed further into products L1A, L2A and L3A. They also must all be sold together or not at all. The selling prices would then be: Selling price per litre L1A $9; L2A $7; L3A $10 If L1, L2 and L3 are processed further, the following Further processing costs L1 to L1A $1,000; L2 to L2A $2,000; L3 to L3A $2,400 Required: Allocate common process cost using NRV method and constant gross margin percentage method

No. 2 Dee Co produces three liquid pharmaceuticals L1, L2 and L3 from a common process. They must be produced and sold together. 1,000 litres of each of the three products are produced, incurring common process costs of $20,000 in total. The selling prices per litre for the three products at the end of the common process are: Selling price per litre L1 $6 L2 $5 $8 $9 L3 Alternatively, all three liquids can be processed further into products L1A, L2A and L3A. They also must all be sold together or not at all. The selling prices would then be: Selling price per litre L1A L2A $7 L $10 If L1, L2 and L3 are processed further, the following Further processing costs L1 to L1A $1,000 L2 to L2A $2,000 L3 to L3A $2,400 Required: Allocate common process cost using NRV method and constant gross margin percentage method