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 $7,250, and GS-80 is processed into 50 gallons of product GS-805 at a cost of $5,750.

The production process starts at point 1. A total of $20,000 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 $725 a gallon, and GS-80 can be sold for $145 a gallon. The process is completed at point 3products GS-505 and GS-805 have a sales price of $585 a gallon and $225 a gallon, respectively.

Required:

Allocate the joint product costs and then compute the cost per unit using each of the following methods: (1) physical measure, (2) sales value at split-off, and (3) net realizable value. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)

2.

HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service departments efforts (in percentages) to the other departments is shown in the following table:

	To
From	Actuarial	Premium Rating	Advertising	Sales
Actuarial		80%	15%	5%
Premium	25%		15	60

The direct operating costs of the departments (including both variable and fixed costs) are:

Actuarial	$ 84,000
Premium rating	19,000
Advertising	64,000
Sales	44,000

Required:

1. Determine the total costs of the advertising and sales departments after using the direct method of allocation.

2. Determine the total costs of the advertising and sales departments after using the step method of allocation.

3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation.

Determine the total costs of the advertising and sales departments after using the direct method of allocation.

	Total Cost Allocated
Advertising department
Sales department

Determine the total costs of the advertising and sales departments after using the step method of allocation.

	Total Cost Allocated
Advertising department
Sales department

Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

	Total Cost Allocated
Advertising department
Sales department

GS-50 cost GS-80 cost Total cost per unit per unit per unit 0 (1) Physical measure (2) Sales value at split-off $ 0 GS-505 cost GS-805 cost per unit per unit Total cost per unit (3) Net realizable value $ 0