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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Hernandez 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.
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