Hernandez Industries manufactures shampoo. Joints costs incurred total $30,000 for a standard production run. A standard production run generates 10,000 gallons of Everyday Shampoo and 6,000 gallons of Specialty Shampoo. Everyday Shampoo sells for $9/gallon and Specialty Shampoo sells for $15/gallon

Currently all Specialty Shampoo is further processed into 7,000 gallon of Top Dollar Shampoo tha sellsfor $21/gallon. (Further processing, at a cost of $37,000, involves adding a top secret, special ingredient and doing some additional refinement.) a. How should the $30,000 of joint product costs be allocated under the Net Realizable Value Method? b. Based on profitability only, should Hernandez continue to convert all Specialty Shampoo into Top Dollar Shampoo? Show calculations to support your answer.