Task: Split off Point and Estimated net realizable value
Raw materials are put into production in Department X, and at the end of processing in this department, 3 products appear.
Product A is sold at the split-off point with no further processing. Products B and C require further processing before they are sold.
Product B is processed in Department Y, and product C is processed in Department Z.
The company uses the estimated net realizable value method of allocating joint production costs. Following is the summary of costs and other data for the quarter ended June 30.
At the beginning of the quarter, there were no on hand inventory. All units on hand at the end of the quarter were fully complete and there was no raw material left.
| Products |
|
|
A |
B |
C |
| Pounds Sold |
|
19000 |
58000 |
71000 |
| Pounds on hand at quarter end |
48000 |
0 |
43000 |
| Sales |
|
|
$15,200 |
$72,500 |
$106,500 |
|
|
|
|
|
|
| Departments |
|
X |
Y |
Z |
| Raw Material Cost |
|
$56,000 |
$0 |
$0 |
| Direct labor Cost |
|
$23,500 |
$43,000 |
$98,175 |
| Manufacturing Overhead |
$9,000 |
$11,800 |
$40,575 |
Determine Amounts per product for A,B,& C:
a. Estimated net realizable value used for allocating joint costs
b. joint costs allocated to each
Determine Cost of Goods Sold and Finished goods inventory for quarter end
________ COGS
_________Finished goods inventory
If product A could be processed further at an additional cost $2.00 per pound and then sold for $4.20 per pound,
what would the incremental income be from this?