Question
Northern Company processes 100 gallons of raw materials into 75 gallons of product GS-50 and 25 gallons of GS-80. GS-50 is further processed into 50
Northern Company processes 100 gallons of raw materials into 75 gallons of product GS-50 and 25 gallons of GS-80. GS-50 is further processed into 50 gallons of product GS-505 at a cost of $8,000, and GS-80 is processed into 50 gallons of product GS-805 at a cost of $5,000. Exhibit 1 depicts this manufacturing flow.
The production process starts at point 1. A total of $26,000 in joint manufacturing costs are incurred in reaching point 2. Point 2 is the split-off point of the process that manufactures GS-50 and GS-80. At this point, GS-50 can be sold for $375 a gallon, and GS-80 can be sold for $75 a gallon. The process is completed at point 3products GS-505 and GS-805 have a sales price of $572 a gallon and $203 a gallon, respectively.
Allocate the joint product costs and then compute the cost per unit using net realizable value.
A. | GS-50 = $260; GS-80 = $204. | |
B. | GS-50 = $325; GS-80 = $204. | |
C. | GS-50 = $576; GS-80 = $260. | |
D. | GS-50 = $576; GS-80 = $204. | |
E. | GS-50 = $576; GS-80 = $65. |
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