(Processing beyond split off and cost allocations) Planetary Products has a joint process that makes three products. Joint cost for the process is $30,000.
|
Per Unit |
Incremental |
Final |
||
|
Units of |
Selling Price |
Processing |
Sales |
|
|
Product |
Output |
at Split Off |
Costs |
Price |
|
Sun |
5,000 |
$2.00 |
$1.50 |
$3.00 |
|
Moon |
10,000 |
1.00 |
2.00 |
6.00 |
|
Mars |
250 |
1.50 |
0.20 |
1.80 |
Sun, Moon, and Mars weigh 10 pounds, 6 pounds, and 2 pounds, respectively.
a. Determine which products should be processed beyond the split off point.
b. Determine whether Mars should be treated as a by product. Allocate the joint processing cost based on units produced, weight, and approximated net realizable value at split off. Use the net realizable value method in accounting for any by products.