Problem 11 59 Estimated Net Realizable Value and Effects of Processing Further (LO 11 7, 9) Fletcher Fabrication, Inc , produces three products by a joint production process Raw materials are put into production in Department X, and at the end of processing in this department, three products appear Product A is sold at the split off point with no further processing Products B and C require further processing before they are sold Product B is processed in Department Y, and product C is processed in Department Z The company uses the estimated net realizable value method of allocating joint production costs Following is a summary of costs and other data for the quarter ended June 30 No inventories were on hand at the beginning of the quarter No raw material was on hand at June 30 All units on hand at the end of the quarter were fully complete as to processing Products A B C Pounds sold 21,000 63,000 72,000 Pounds on hand at June 30 45,000 0 39,000 Sales revenues $ 13,650 $ 110,250 $ 129,600 Departments X Y Z Raw material cost $ 59,000 $ 0 $ 0 Direct labor cost 26,500 42,550 99,800 Manufacturing overhead 12,000 9,000 33,175 Required (a) Determine the following amounts for each product (Do not round intermediate calculations Round your answer to the nearest dollar amount Leave no cells blank be certain to enter 0 wherever required ) (1) Estimated net realizable value used for allocating joint costs Prooduct Joint Costs Product A Product B Product C Total $ (2) Joint costs allocated to each of the three products Products Joint Costs Product A Product B Product C Total $ (3) Cost of goods sold Cost of goods sold Product A Product B Product C Totals $ (4) Finished goods inventory costs, June 30 Ending Inventory Product A Product B Product C Totals $ (b) Assume that the entire output of product A could be processed further at an additional cost of $1 75 per pound and then sold for $4 60 per pound Compute the incremental income from further processing A Incremental Income (c) Considering the results of part b, should the company process product A further Yes or No

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Problem 11-59 Estimated Net Realizable Value and Effects of Processing Further (LO 11-7, 9) Fletcher Fabrication, Inc., produces three products by a joint production process.

Problem 11-59 Estimated Net Realizable Value and Effects of Processing Further (LO 11-7, 9)

Fletcher Fabrication, Inc., produces three products by a joint production process. Raw materials are put into production in Department X, and at the end of processing in this department, three products appear. Product A is sold at the split-off point with no further processing. Products B and C require further processing before they are sold. Product B is processed in Department Y, and product C is processed in Department Z. The company uses the estimated net realizable value method of allocating joint production costs. Following is a summary of costs and other data for the quarter ended June 30.

No inventories were on hand at the beginning of the quarter. No raw material was on hand at June 30. All units on hand at the end of the quarter were fully complete as to processing.

Products	A		B		C
Pounds sold		21,000		63,000		72,000
Pounds on hand at June 30		45,000		0		39,000
Sales revenues	$	13,650	$	110,250	$	129,600

Departments	X		Y		Z
Raw material cost	$	59,000	$	0	$	0
Direct labor cost		26,500		42,550		99,800
Manufacturing overhead		12,000		9,000		33,175

Required:

(a)

Determine the following amounts for each product. (Do not round intermediate calculations. Round your answer to the nearest dollar amount. Leave no cells blank - be certain to enter "0" wherever required.)

(1)

Estimated net realizable value used for allocating joint costs.

Prooduct	Joint Costs
Product A	?
Product B	?
Product C	?
Total	$

(2)

Joint costs allocated to each of the three products.

Products	Joint Costs
Product A	?
Product B	?
Product C	?
Total	$

(3) Cost of goods sold

	Cost of goods sold
Product A	?
Product B	?
Product C	?
Totals	$

(4) Finished goods inventory costs, June 30

	Ending Inventory
Product A	?
Product B	?
Product C	?
Totals	$

(b)

Assume that the entire output of product A could be processed further at an additional cost of $1.75 per pound and then sold for $4.60 per pound. Compute the incremental income from further processing A.

Incremental Income

(c)

Considering the results of part b, should the company process product A further?

Yes or No