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Question - Hovart Corporation manufactures two products out of a joint process: Compod and Ultrasene. The joint costs incurred are P2,500,000 for a standard production run that generates 120,000 gallons of Compod and 80,000 gallons of Ultrasene. Compod sells for P20 per gallon while Ultrasene sells for P32.5 per gallon.
Suppose the following additional processing costs are required beyond split-off point in order to obtain Compod and Ultrasene: P1 per gallon for Compod and P11 per gallon for Ultrasene, calculate the amount of joint cost of each production run allocated to Compod on a net-realizable value basis.
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