Smith Liquids produces three products by a joint production process. Raw materials are put into production in Department 1, and at the end of processing in this department, three products appear. Alpha is sold at the split-off point with no further processing. Beta and Gamma require further processing before they are sold. Beta is prcessed in Department 2, and Gamma is processed in Department 3. Smith Liquids uses the estimated net realizable value method of allocating joint production costs.

No inventories were on hand at July 1, the beginning of the quarter. No raw material was on hand at September 30. All units on hand at September 30 were fully complete as to processing. In the next worksheet tab is a summary of costs and other data for the period ended September 30.

a. Determine the following amounts for each product (1) estimated net realizable value used for allocating joint costs. (2) joint costs allocated to each of the three products, (3) cost of goods sold, (4) finished goods inventory costs, September 30th

b. Assume that the entire output of Alpha could be processed further at an additional cost of $12 per unit and then sold for $16.30 per unit. What would have been the effect on operating profits if all of Alpha output of the quarter had been further processed and then sold rather than being sold at the splitoff point?

c. Should Smith Liquids process Alpha further and why?