Reference no: EM132828915

Question - Northern Company processes 100 gallons of raw materials into 75 gallons of product GS-50 and 25 gallons of GS-80. GS-50 is further processed into 50 gallons of product GS-505 at a cost of $16,000, and GS-80 is processed into 50 gallons of product GS-805 at a cost of $13,000. Exhibit 1 depicts this manufacturing flow.

The production process starts at point 1. A total of $42,000 in joint manufacturing costs are incurred in reaching point 2. Point 2 is the split-off point of the process that manufactures GS-50 and GS-80. At this point, GS-50 can be sold for $575 a gallon, and GS-80 can be sold for $115 a gallon. The process is completed at point 3-products GS-505 and GS-805 have a sales price of $764 a gallon and $371 a gallon, respectively.

Required - Allocate the joint product costs and then compute the cost per unit using each of the following methods: (1) physical measure, (2) sales value at split-off, and (3) net realizable value.