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Mughul manufactures three products (MG-1, MG-2, MG-3) using a joint manufacturing process and incurred $540,000 in joint costs this year. MG-1 and MG-2 can
Mughul manufactures three products (MG-1, MG-2, MG-3) using a joint manufacturing process and incurred $540,000 in joint costs this year. MG-1 and MG-2 can be processed further to enhanced products. When processed further MG-1 sells for $285/unit and MG-2 sells for $125/unit. MG-3 must be sold at split-off. Production and sales information for the year is as follows: Units produced & sold Sales price at Split-off Separable processing costs MG-1 3,600 MG-2 MG-3 6,000 10,000 $250 /unit $102,600 $112 / unit $93,750 $24 / unit a. Determine the amount of joint costs allocated to each product using the Sales Value at Split- Off method. (round to 4 deci) b. Determine the amount of joint costs allocated to each product using the Net Realizable Value (NRV) method. (round intermd calcul to four decimals, round answers to dollars) c. Which product mix combination of the production and sale of each product maximizes total operating income for Mughul? Show calculations and specify the product mix combination.
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