The Los Alamos Chemical Company manufactures two products, X1 and X2, from a single input X. During a recent month, 100,000 units of X were processed into 60,000 units of X1 and 40,000 units of unfinished X2 at a cost of $180,000. All units of X2 were completed at an additional cost of $20,000. The unit selling price of X1 and X2 are $2.00 and $3.50, respectively.

Determine the final unit cost of X1 and X2 when joint costs are allocated on the basis of net realizable value (NRV).

1.How much joint cost (in $) will be allocated to X1 using the NRV method?

2.How much joint cost (in $) will be allocated to X2 using the NRV method?

3.How much is the total cost (in $) of X2?

4.What is the unit cost (in $) of X1?

5.what is the unit cost (in $) of X2?

6.What is the total operating income (in $) for selling all units produced of X1 and X2?

7.X2 can already be sold for $2.64 at the split-off point*, what will be the resulting total operating income (in $) if management decides to sell X2 without further processing? (Note: No changes for the given data of X1.)

100,000 units - X1 60,000 units @ $2.00 $180,000 X2 40,000 units @ $3.50 $20,000