Meadow Labs produces a drug used for the treatment of arthritis. The drug is produced in batches. (Click the icon to view additional information.) In March, Meadow, which had no opening inventory, processed one batch of chemicals. It sold 2,200 gallons of product for human use and 350 gallons of the veterinarian product. Meadow uses the net realizable value method for allocating joint production costs. Read the requirements. More Info Requirements Chemicals costing $55,000 are mixed and heated, then a unique separation process then extracts the drug from the mixture. A batch yields a total of 3,000 gallons of the chemicals. The first 2,400 gallons are sold for human use while the last 600 gallons, which contain impurities, are sold to veterinarians. The costs of mixing, heating, and extracting the drug amount to $462,800 per batch. The output sold for human use is pasteurized at a total cost of $134,400 and is sold for $570 per gallon. The product sold to veterinarians is irradiated at a cost of $25 per gallon and is sold for $500 per gallon. 1. How much in joint costs does Meadow allocate to each product? 2. Compute the cost of ending inventory for each of Meadow's products. 3. If Meadow were to use the constant gross-margin percentage NRV method instead, how would it allocate its joint costs? 4. Calculate the gross margin on the sale of the product for human use in March under the constant gross-margin percentage NRV method. 5. Suppose that the separation process also yields 340 pints of a toxic byproduct. Meadow currently pays a hauling company $5,900 to dispose of this byproduct. Meadow is contacted by a firm interested in purchasing a modified form of this byproduct for a total price of $6,800. Meadow estimates that it will cost about $30 per pint to do the required modification. Should Meadow accept the offer? Print Done Print Done