E16-25 (similar to) :3 Question Help The Evrett Company operates a simple chemical process to convert a single material into During 2017, the selling prices of the items and the total amounts sold were as follows: three separate items, referred to here as X, Y, and Z. All three end products are separated (Click the icon to view the sales information.) simultaneously at a single splitoff point. (Click the icon for additional information.) Read the requirements. Requirement 1. Compute the cost of inventories of X, Y, and Z for balance sheet purposes and the cost of goods sold for income statement purposes as of December 31, 2017, using the (a) NRV, and the (b) constant gross-margin percentage NRV cost allocation methods. (a) Start with the NRV cost allocation method. Begin by computing the net realizable value for total production at the point of splitoff and the weighting for each product. (Enter the weights to two decimal places.) X Y Z Total i More Info Products X and Y are ready for sale immediately upon splitoff without further processing or any other additional costs. Product Z, however, is processed further before being sold. There is no available market price for Z at the splitoff point. The selling prices quoted here are expected to remain the same in the coming year. Print Done X-68 tons sold for $1,200 per ton Y - 480 tons sold for $900 per ton Z - 672 tons sold for $600 per ton The total joint manufacturing costs for the year were $580,000. Evrett spent an additional $200,000 to finish product Z. There were no beginning inventories of X, Y, or Z. At the end of the year, the following inventories of completed units were on hand: X, 132 tons; Y, 120 tons; Z, 28 tons. There was no beginning or ending work in process. i Requirements Compute the cost of inventories of X, Y, and Z for balance sheet purposes and the cost of goods sold for income statement purposes as of December 31, 2017, using the following joint-cost-allocation methods: a. NRV (Net realizable value) method Constant gross-margin percentage NRV method 2. Compare the gross-margin percentages for X, Y, and Z using the two methods given in requirement 1