Options for 1-6:

(1): process further / sell as is (2): decreases / increases (3): process further / sell as is (4): be higher if they do / be lower if they do (5): different / the same

(6): is / is not

3. Interlock Soy Products (USP) buys soybeans and processes them into other soy products. Each ton of soybeans that USP purchases for $320 can be converted for an additional $200 into 675 lbs of soy meal and 120 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.28 and soy oil can be sold in bulk for $4.25 per gallon. USP can process the 675 pounds of soy meal into 825 pounds of soy cookies at an additional cost of $370. Each pound of soy cookies can be sold for $2.28 per pound. The 120 gallons of soy oil can be packaged at a cost of $210 and made into 480 quarts of Soyola. Each quart of Soyola can be sold for $1.45. Read the requirements? Requirement 1. Allocate the joint cost to the cookies and the Soyola using the (a) Sales value at splitoff method and (b) NRV method. a. First, allocate the joint cost using the Sales value at splitoff method. (Round the weights to three decimal places and joint costs to the nearest dollar.) Cookies/ Soy Meal Soyolal Soy Oil Total Sales value of total production at splitoff Weighting Joint costs allocated b. Now allocate the joint cost to the cookies and the Soyola using the NRV method. (Round the weights to three decimal places and joint costs to the nearest dollar.) Cookies Soyola Total Final sales value of total production Deduct separable costs Net realizable value Weighting Joint costs allocated Requirement 2. Should USP have processed each of the products further? What effect does the allocation method have on this decision? Begin by calculating the profit or loss that would occur if USP processed the products further. (Use parentheses or a minus sign for losses.) Cookies Soyolal Soy Meal Soy Oil Sell at splitoff: Revenue Process further : NRV Profit (Loss) from processing further L USP should (1) - the soy meal because it (2) - profit. They should (3) the soy oil because profit will (4) Since the total joint cost is (5)_ under both allocation methods, it (6) - a relevant cost to the decision to sell at splitoff or process further