The
SinclairSinclair
Spirits Company produces two
productslong dash—turpentine
and methanol (wood
alcohol)long dash—by
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
|
Expert Answer