Question
The Larkspur Oil Company buys crude coconut and palm nut oil. Refining this oil results in four products at the split-off point: soap grade, cooking
The Larkspur Oil Company buys crude coconut and palm nut oil. Refining this oil results in four products at the split-off point: soap grade, cooking grade, light moisturizer, and heavy moisturizer. Light moisturizer is fully processed at the split-off point. Soap grade, cooking grade, and heavy moisturizer can individually be refined into fine soap, cooking oil, and premium moisturizer. In the most recent month (June), the output at the split-off point was:
Soap grade | 97,000 L | |
Cooking grade | 303,000 L | |
Light moisturizer | 48,000 L | |
Heavy moisturizer | 52,000 L |
The joint costs of purchasing the crude coconut and palm nut oil and processing it were $91,000. There were no beginning or ending inventories. Sales of light moisturizer in June were $48,000. Total output of soap, cooking oil, and heavy moisturizer was further refined and then sold. Data relating to June are as follows:
Separable | |||||||
---|---|---|---|---|---|---|---|
Product | Costs | Sales | |||||
Fine soap | $ | 183,900 | $ | 303,000 | |||
Superior cooking oil | 77,000 | 99,800 | |||||
Premium moisturizer | 84,500 | 111,200 |
Larkspur Oil Company had the option of selling the soap grade, cooking grade, and heavy moisturizer at the split-off point. This alternative would have yielded the following sales for the June production:
Soap grade | $ | 52,000 | ||
Cooking grade | 29,000 | |||
Heavy moisturizer | 71,000 |
Allocate the joint cost, using net realizable value. (Round proportion to 4 decimal places, e.g. 0.2126 and final answers to whole amounts, e.g. 5,897.)
Allocation | |||
---|---|---|---|
Product | of $91,000 | ||
Fine Soap | $ | ||
Superior Cooking Oil | |||
Light moisturizer | |||
Premium Moisturizer |
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