Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The joint cost to produce products 1A, 2A, 3A and 4A is $4,400. Each of these four products can either be sold at the
The joint cost to produce products 1A, 2A, 3A and 4A is $4,400. Each of these four products can either be sold at the end of the joint production process, or can be processed further into 1B, 2B, 3B and 4B respectively. < < Production and selling information is as follows: < Product Name < Batch size (kg) Sales Value ($ per kg) < Product 1A < 40 100 Product 2A Product 3A Product 4A 21 < 6 3 < 50 20 0.5 If further processed: < processed from: < Product 1A Product 2A Product 3A Product 4A processed into: < Product 1B < Product 2B Product 3B Product 4B Additional costs per batch ($) < 50 130 120 8 Final batch size (kg) < 29 15 6 3 < Final Sales value ($/kg) < 120 200 100 6 < For example, at the end of the joint production process, there are 40 kg of Product 1A produced, and each kg of Product 1A sells for $100/kg. The 40kg batch of Product 1A can either be sold at this point for $4,000 (40kg x $100/kg) or the batch can be further processed into a batch of Product 1B at an additional cost of $50. This will produce a 29kg batch of Product 1B that sells for $120/kg for a total sales value of $3,480 (29kg x $120/kg). < Required: < Part A Assuming that none of the products are byproducts, calculate the how much of the $4,000 joint cost should be allocated to each product using the four methods discussed in class. < < Part B Allocate the $4,400 joint cost assuming using the Net Realizable Value method and assuming that product 3 and product 4 are both byproducts. < < (hint: always determine if it makes economic sense to process further)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started