XYZ Ltd manufactures two products, Compod and Ultrasene, out of a joint process. The joint costs incurred are $750,000 for a standard production run that generates 120,000 litres of Compod and 80,000 litres of Ultrasene. Compod sells for $6.00 per litre while Ultrasene sells for $9.75 per litre.

Required

A. If there are no additional processing costs incurred after the split-off point, calculate, for each production run, the amount of joint cost allocated to Compod on a physical units basis.

B. If there are no additional processing costs incurred after the split-off point, calculate, for each production run, the amount of joint cost allocated to Ultrasene on a relative sales value basis.

C. Explain what are the net realisable value method and the constant gross profit margin method