acc407 the cost of the joint input including processing costs before the split off p 491731
Hernandez Chemical Company’s production process for two of its solvents can be diagrammed using a process map as shown in Exhibit 12-25.
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The cost of the joint input, including processing costs before the split-off point, is $400,000. Solvent A can be sold at the split-off point for $20 per gallon and solvent B for $60 per gallon.
|
Indirect materials (Pounds) |
55,000 |
|
Base materials (gallons) |
220,000 |
|
Processing machine (machine hours) |
80,000 |
|
Labor (labor hours) |
45,000 |
|
Total Costs |
$400,000 |
at split-off point:
|
Yield |
Selling Price |
|
|
Solvent A |
20,000 |
$20 |
|
Solvent B |
10,000 |
$60 |
|
Total |
30,000 |
1. Allocate the $400,000 joint cost to solvents A and B by the physical-units method.
2. Allocate the $400,000 joint cost to solvents A and B by the relative-sales-value method.
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