Need Help How to Calculate Requirement #4 Part 6 & 7

The Rouse Spirits Company produces two productsmethanol (wood alcohol) and turpentineby a joint process. Joint costs amount to $121,000 per batch of output. Each batch totals 11,500 gallons: 25% methanol and 75% turpentine. Both products are processed further without gain or loss in volume. Separable processing costs are methanol,$2 per gallon, and turpentine,$1 per gallon. Methanol sells for $20 per gallon. Turpentine sells for $15 per gallon.

Requirement 4. - Part 6

The company has discovered an additional process by which methanol (wood alcohol) can be made into a pleasant-tasting alcoholic beverage. The selling price of this beverage would be $65 a gallon. Additional processing would increase separable costs $8 per gallon (in addition to the $2 per gallon separable cost required to yield methanol). The company would have to pay excise taxes of 20% on the selling price of the beverage. Assuming no other changes in cost, what is the joint cost applicable to the wood alcohol (using the NRV method)? Should the company produce the alcoholic beverage? Show your computations.

Begin by calculating the joint cost applicable to the wood alcohol (using the NRV method). (Round the weights to five decimal places.)

The joint costs allocated to the wood alcohol is

$60,500

.

60500 is the correct answer - I need to know how they came up with the number

Part 7 - Need Help how to Calculate Part 7

Should the company produce alcoholic beverages? Show your computations.

To help you to determine if the company should produce the alcoholic beverage, complete the following table.

Incremental revenues
Incremental costs:
Added processing
Taxes
Incremental operating income (loss) from further processing