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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.
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.

#### 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