Hernandez Chemical Company's production
SuperClassHernandez Chemical Company's production process for two of its solvents can be diagrammed using a process map as shown in Exhibit 12-25.
The cost of the joint input, including processing costs before the split-off point, is $400,000. Solvent A can be sold at the split-off point for $20 per gallon and solvent B for $60 per gallon.
Indirect materials (Pounds)
| 55,000
|
Base materials (gallons)
| 220,000
|
Processing machine (machine hours)
| 80,000
|
Labor (labor hours)
| 45,000
|
Total Costs
| $400,000
|
at split-off point:
Yield
| Selling Price
| |
Solvent A
| 20,000
| $20
|
Solvent B
| 10,000
| $60
|
Total
| 30,000
|
1. Allocate the $400,000 joint cost to solvents A and B by the physical-units method.
2. Allocate the $400,000 joint cost to solvents A and B by the relative-sales-value method.
- 8 years ago
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- hernandez_chemical_companys_production.xlsx