MARYLAND CORPORATION manufactures three liquid products-Alpha, Beta and Gamma using a joint process with direct materials, direct labor and overhead totaling $560,000 per batch. In addition, the process results in 5,000 lbs. of Twinkle, by-product and has chosen to 'inventory' the by-product by recognizing the sales in the period of production. The following information is available regarding these products resulting from the processing of one batch: which it sells on the open market for $0.40 per pound. The company treats "Twinkle' as a At Split-Off Point After Split-Off Point Value per Gallon Final Selling Price Product Alpha Beta Gamma Twinkle (in lbs) Gallons Cost/gallon 4,500 18,000 135,800 14 $ 24 15 18 $0.40 Round all allocation rates to 4 decimal places if necessary, and use your rounded number in all subsequent calculations. Required: 1. Allocate the joint costs using the physical unit method. Using this method, what would the journal entry be to reflect the allocation of joint costs on the books of the company? 2. Allocate the joint costs using the sales value at split-off method. 3. Allocate the joint costs using the net realizable value (NRV) method. 4. Allocate the joint costs using the Constant Gross Profit method 5- in #1 above, we deducted the market value of the Twinkle byproduct from the joint costs before costs"). WHY do you allocating to main products (the preferred manner, called "inventorying the think this method is preferred? What about this treatment seems right? What advantages are there to doing it this way? Suggest another way that they could handle the costs of the by-product and the possible future sales proceeds. 6. Does this seem right or wrong? WHY or WHY NOT? Assume you are using the NRV method and the further processing of Gamma was $7 per gallon instead of $2 per gallon. Would this change your allocation? WHY or WHY NOT? If your allocation would change, what would the revised allocations be? 7. Strictly from the standpoint of matching for the purposes of GAAP, given the information above, which of the above methods is preferred and WHY? 8