Omega Company manufactures three chemicals in a joint process. The manufacturing costs of

the joint process include $35,000 of direct materials and $55,000 of conversion costs. All three

chemicals are then processed further before they are sold. Other pertinent data are as follows:

Chemicals Sales Value at Split-off Separable Costs Final Sales Value

A $40,000 $78,000 $120,000

B $80,000 $103,000 $180,000

C $60,000 $44,000 $100,000

2. Using the estimated net realizable value method, the joint costs allocated to

Chemical B would be

a) $40,000.

b) $51,500.

c) $41,200.

d) $40,500.

e) $39,600.

3. The decision to process all three chemicals beyond the split-off point is suboptimal. If the

optimal decision had been made, the income of Omega Company would have improved

by

a) $5,000.

b) $2,000.

c) $7,000.

d) $3,000.

e) $4,000.