Joint Cost Allocation$-$Net Realizable Value Method

Nature's Garden Inc. produces wood chips, wood pulp, and mulch. These products are

produced through harvesting trees and sending the logs through a wood chipper machine.

One batch of logs produces $20,400$ cubic yards of wood chips, $10,400$ cubic yards of mulch,

and $9,200$ cubic yards of wood pulp. The joint production process costs a total of $$34,000$

per batch. After the split$-$off point, wood chips are immediately sold for $$25$ per cubic yard

while wood pulp and mulch are processed further. The market value of the wood pulp and

mulch at the split$-$off point is estimated to be $$22$ and $$25$ per cubic yard, respectively. The

additional production process of the wood pulp costs $$5$ per cubic yard, after which it is sold

for $$30$ per cubic yard. The additional production process of the mulch costs $$4$ per cubic

yard, after which it is sold for $$27$ per cubic yard.

Allocate the joint costs of production to each product using the net realizable value method.