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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.
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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.
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|
Indirect materials (Pounds) Â Â |
55,000 Â Â |
|
Base materials (gallons) Â Â |
220,000 Â Â |
|
Processing machine (machine hours) Â Â |
80,000 Â Â |
|
Labor (labor hours) Â Â |
45,000 Â Â |
|
Total Costs   |
$400,000 Â Â |
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at split-off point:
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| Â |
Yield   |
Selling Price   |
|
Solvent A Â Â |
20,000 Â Â |
$20 Â Â |
|
Solvent B Â Â |
10,000 Â Â |
$60 Â Â |
|
Total   |
30,000 Â Â |
 |
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1. Allocate the $400,000 joint cost to solvents A and B by the physical-units method.
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2. Allocate the $400,000 joint cost to solvents A and B by the relative-sales-value method.
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