Problem 15-30 (alt1) Question Help Terrace Labs produces a drug used for the treatment of arthritis. The drug is produced in batches. (Click the icon to view additional information.) In March, Terrace, which had no opening inventory, processed one batch of chemicals. It sold 1,900 gallons of product for human use and 150 gallons of the veterinarian product. Terrace uses the net realizable value method for allocating joint production costs. Read the requirements. - X i More Info Chemicals costing $49,000 are mixed and heated, then a unique separation process then extracts the drug from the mixture. A batch yields a total of 2,600 gallons of the chemicals. The first 2,200 gallons are sold for human use while the last 400 gallons, which contain impurities, are sold to veterinarians. The costs of mixing, heating, and extracting the drug amount to $442,000 per batch. The output sold for human use is pasteurized at a total cost of $116,600 and is sold for $610 per gallon. The product sold to veterinarians is irradiated at a cost of $15 per gallon and is sold for $480 per gallon. Print Done - X i Requirements 1. How much in joint costs does Terrace allocate to each product? 2. Compute the cost of ending inventory for each of Terrace's products. 3. If Terrace were to use the constant gross-margin percentage NRV method instead, how would it allocate its joint costs? 4. Calculate the gross margin on the sale of the product for human use in March under the constant gross-margin percentage NRV method. 5. Suppose that the separation process also yields 280 pints of a toxic byproduct. Terrace currently pays a hauling company $6,100 to dispose of this byproduct. Terrace is contacted by a firm interested in purchasing a modified form of this byproduct for a total price of $7,500. Terrace estimates that it will cost about $28 per pint to do the required modification. Should Terrace accept the offer? Print Done