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Tucariz Company processes Duo into two joint products, Big and Mini. Duo is purchased in 1,000 gallon drums for $2,000. Processing costs are $3,000 to process the 1,000 gallons of Duo into 800 gallons of Big and 200 gallons of Mini. The selling price is $9 per gallon for Big and $4 per gallon for Mini. Big can be processed further into 600 gallons of Giant if $1,000 of additional processing costs are incurred. Giant can be sold for $17 per gallon.
Problem 1: If Tucariz uses the net realizable value method to allocate costs to the joint products, the total cost of producing Giant is A. $5,600 B. $5,564 C. $5,520 D. $4,600
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