Alternative joint-cost-allocation methods further-process

Reference no: EM13582005

Alternative joint-cost-allocation methods, further-process decision. The Wood SpiritsCompany produces two products-turpentine and methanol (wood alcohol)-by a joint process. Joint costs amount to $120,000 per batch of output. Each batch totals 10,000 gallons: 25% methanol and 75% turpentine. Both products are processed further without gain or loss in volume. Separable processingcosts are methanol, $3per gallon; turpentine, $2 per gallon. Methanol sells for $21 per gallon. Turpentine sells for $14 per gallon.

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?

2. If joint costs are allocated on an NRV basis, how much of the joint costs will be allocated to turpentine and to methanol?

Reference no: EM13582005

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