Assume that the sugar cannot be sold at split off but requires additional processing. The additional processing costs $100 per ton, at which point the sugar can be sold for $450 per ton. Allocate the joint costs to the two products using the estimated net realizable value method.
Self study Questions 4: Thumb Beets, Inc., grows sugar beets. After the beets are harvested, they are processed into sugar and livestock feed. One ton of sugar beets yield 0.2 tons of sugar and 0.4 tons of feed. The sugar can be sold for $400 per ton and the feed for $200 per ton at the split off point. The cost of the sugar beets is $60 per ton (2,000 pounds). Processing each ton of beets up to the split off point costs $40 in labor and overhead. Compute the joint cost allocated to sugar and feed produced from 10 tons of sugar beets using the net realizable value method.