Valdosta Chemical Company manufactures two industrial chemical products in a joint process. In May, 16,000 gallons of input costing $63,000 were processed at a cost of $165,000. The joint process resulted in 12,000 pounds of Resoline and 4,000 pounds of Krypto. Resoline sells for $25 per pound, and Krypto sells for $50 per pound. Management generally processes each of these chemicals further in separable processes to produce more refined chemical products. Resoline is processed separately at a cost of $6 per pound. The resulting product, Resolite, sells for $33 per pound. Krypto is processed separately at a cost of $15 per pound. The resulting product, Kryptite, sells for $69 per pound.

Required:

1. 2-a. Allocate the companys joint production costs for May using the physical-units method.

2. 2-b. Allocate the companys joint production costs for May using the relative-sales-value method.

3. 2-c. Allocate the companys joint production costs for May using the net-realizable-value method.

4. 3-a. Valdostas management is considering an opportunity to process Kryptite further into a new product called Omega. The separable processing will cost $38 per pound. Packaging costs for Omega are projected to be $7 per pound, and the anticipated sales price is $105 per pound. Calculate the incremental profit or loss from processing Kryptite into Omega.

5. 3-b. Should Kryptite be processed further into Omega?