Question
Killian Company manufactures two skin care lotions, Liquid Skin and Silken Skin, out of a joint process. The joint (common) costs incurred are $420,000 for
Killian Company manufactures two skin care lotions, Liquid Skin and Silken Skin, out of a joint process. The joint (common) costs incurred are $420,000 for a standard production run that generates 180,000 gallons of Liquid Skin and 120,000 gallons of Silken Skin. Liquid Skin sells for $2.40 per gallon, and Silken Skin sells for $3.90 per gallon.
If additional processing costs beyond the split-off point are $1.40 per gallon for Liquid Skin and $.90 per gallon for
Silken Skin, the amount of joint cost of each production run allocated to Silken Skin on a net realizable value basis is
A. $168,000.
B. $140,000.
C. $280,000.
D. $252,000
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