Reference no: EM133011720

Smart Corporation produces two joint products DX and EX. Additionally, FX is a by-product of DX. The production processes for a given year are as follows:

• In the first department - Cutting - 117,000 pounds of direct materials are processed at a total cost of $150,000. After processing in the Cutting department, 62,000 pounds are transferred to the Mixing department, and 55,000 pounds (now EX) are transferred to the Fabricating department.
• In the Mixing department, the material is further processed at a total additional cost of $18,000. Of the pounds available, 50,000 pounds (now DX) are transferred to the Finishing department, and the remaining pounds emerge as FX, the by-product to be sold at $2 per pound. Marketing expenses of the disposal of FX are $4,000. The net realizable value of the by-product is treated as an addition to the sales value of DX.
• In the Finishing department, DX is processed at a total additional cost of $8,400. After this processing, DX is ready for sale at $5 per pound.
• In the Fabricating department, EX is processed at a total additional cost of $123,600. In this department, a normal loss of units of EX occurs, which equals 10% of the good output of EX. The remaining good output of EX is then sold for $6 per pound.

Required:

Problem 1: Allocate joint costs using the net realizable value method.