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    Compute Full Cost and Processing

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    Joint Products, Inc., produces two joint products, X and V using a common input. These are produced in batches. The common input costs $8,000 per batch. To produce the final products (X and V), additional processing costs beyond the split-off point must be incurred. There are no beginning inventories. The accompanying data summarize the operations.

    Products
    X V
    Quantities produced per batch 200 lbs. 400 lbs.
    Additional processing costs per batch
    beyond split-off $1,800 $3,400
    Unit selling prices of completely
    processed products $40/lb $10/lb
    Ending inventory 2,000 lbs 1,000 lbs.

    Required:
    a. Compute the full cost of the ending inventory using net realizable value to allocate joint cost.
    b. If the selling prices at the split-off point (before further processing) are $35 and $1 per pound of X and V respectively, what should the firm do regarding further processing? Show calculations.

    © BrainMass Inc. brainmass.com June 3, 2020, 10:45 pm ad1c9bdddf
    https://brainmass.com/business/accounting/accounting-question-248412

    Solution Preview

    1. Total common input cost = $8,000
    X V
    Ending Inventory 2000 1000
    Selling Price $40 $10
    Value $80,000 ...

    Solution Summary

    This response determines the full cost of the ending inventory and the cost of further processing.

    $2.19

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