Net Realizable Value Method, Decision to Sell at Split-off or Process Further Pacheco, Inc., produces two products, overs and unders, in a single process. The joint costs of this process were $50,000, and 15,000 units of overs and 37,000 units of unders were produced. Separable processing costs beyond the split-off point were as follows: overs, $20,000; unders, $26,180. Overs sell for $2.00 per unit; unders sell for $3.14 per unit.

Required: 1.

Allocate the $50,000 joint costs using the estimated net realizable value method.

Allocated Joint Cost

Overs $

Unders $

2. Suppose that overs could be sold at the split-off point for $1.80 per unit. Should Pacheco sell overs at split-off or process them further?

Overs (should or shouldn't) be processed further as there will be $ (less or more) profit if sold at split-off.