Lafayette Company manufactures two products out of a joint process: Compod and Ultrasene. The joint costs incurred are $810,000 for a standard production run that generates 126,000 gallons of Compod and 86,000 gallons of Ultrasene. Compod sells for $9.00 per gallon while Ultrasene sells for $11.25 per gallon.

Calculate:

1. Joint Cost Allocated to Compound

2. Joint Cost Allocated to Ultrasene

3. Suppose the following additional processing costs are required beyond the split-off point in order to obtain Compod and Ultrasene: $0.90 per gallon for Compod and $3.90 per gallon for Ultrasene. a. Calculate the amount of joint cost of each production run allocated to Ultrasene on a physical-units basis. b. Calculate the amount of joint cost of each production run allocated to Compod on a net-realizable-value basis.

4.Assuming the same data as in requirement 3, suppose Compod can be processed further into a product called Compodalene, at an additional cost of $1.80 per gallon. Compodalene will be sold for $11.40 per gallon by independent distributors. The distributors commission will be 10 percent of the sales price. Calculate the incremental gain or loss from further processing Compod into Compodalene.

b. Calculate the contribution per unit that Compodalene makes towards covering the joint production cost, fixed costs, and profit.