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# Important information about Cost allocation

See attached document for explanation of problem.

Red Sauce Canning Company processes tomatoes into catsup, tomato juice, and canned tomatoes. During the summer of 20X5, the joint costs of processing the tomatoes were \$420,000. There was no beginning or ending inventories for the summer. Production and sales value information for the summer is as follows:

Product Cases Sales Value
at Splitoff Point Separable Costs Selling Price
Catsup 100,000 \$6 per case \$3.00 per case \$28 per case
Juice 150,000 8 per case 5.00 per case 25 per case
Canned 200,000 5 per case 2.50 per case 10 per case

Required:
Determine the amount allocated to each product if the estimated net realizable value method is used, and compute the cost per case for each product.

#### Solution Preview

Red Sauce Canning Company processes tomatoes into catsup, tomato juice, and canned tomatoes. During the summer of 20X5, the joint costs of processing the tomatoes were \$420,000. There was no beginning or ending inventories for the summer. Production and sales value information for the summer is as follows:

Product Cases Sales Value
at Splitoff Point Separable Costs Selling ...

#### Solution Summary

The solution explains the allocation of joint costs using the net realizable value method

\$2.19