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Important information about Cost allocation

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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.

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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