The

SinclairSinclair

Spirits Company produces two

productslong dashturpentine

and methanol (wood

alcohol)long dashby

a joint process. Joint costs amount to

$ 121 comma 000$121,000

per batch of output. Each batch totals

11 comma 50011,500

gallons: 25% methanol and 75% turpentine. Both products are processed further without gain or loss in volume. Separable processing costs are methanol,

$ 2$2

per gallon, and turpentine,

$ 1$1

per gallon. Methanol sells for

$ 20$20

per gallon. Turpentine sells for

$ 15$15

per gallon.Read the requirements

LOADING...

.

Requirement 1. How much of the joint costs per batch will be allocated to turpentine and to methanol, assuming that joint costs are allocated based on the number of gallons at splitoff point?

	Methanol	Turpentine	Total
Physical measure of total production	2,875	8,625	11,500
Weighting	0.25000	0.75000	1.00000
Joint costs allocated	$30,250	$90,750	$121,000

Requirement 2. If joint costs are allocated on an NRV basis, how much of the joint costs will be allocated to turpentine and to methanol? (Round the weights to five decimal places.)

Methanol

Turpentine

Total

Final sales value of total production

Deduct separable costs

5750

8625

NRV at splitoff point

Weighting

Joint costs allocated

1.	How much of the joint costs per batch will be allocated to turpentine and tomethanol, assuming that joint costs are allocated based on the number of gallons at splitoff point?
2.	If joint costs are allocated on an NRV basis, how much of the joint costs will be allocated to turpentine and to methanol?
3.	Prepare product-line income statements per batch for requirement 1 and 2. Assume no beginning or ending inventories.
4.	The company has discovered an additional process by which the methanol(wood alcohol) can be made into a pleasant-tasting alcoholic beverage. The selling price of this beverage would be $ 65$65 a gallon. Additional processing would increase separable costs $ 8$8 per gallon (in addition to the $ 2$2 per gallon separable cost required to yield methanol). The company would have to pay excise taxes of 20% on the selling price of the beverage. Assuming no other changes in cost, what is the joint cost applicable to the wood alcohol (using the NRV method)? Should the company produce the alcoholic beverage? Show your computations. please show work