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# Le Monde Company's allocation of joint production costs

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1. Determine Le Monde Company's allocation of joint production costs for the month of October. (Carry calculation of relative proportions to four decimal places)

Joint production costs will be allocated according to the net realizable value

HTP -3 PST-4 RJ-5 Total Production
700000 350000 170000 1220000
Sales Price 3.2 4.8 4
Sales value 2240000 1680000 680000 4600000
Less further
processing cost 699200 652800 48000 1400000
Net realizable value 1540800 1027200 632000 3200000
Proportion of
Total Production 0.48 0.32 0.20
Allocation of Joint costs 654840.0 436560.0 268600.0 1360000

Per unit costs 0.94 1.25 1.58 1.11

2 Determine the dollar values of the finished goods inventories for HTP-3, PST-4 and RJ-5 as of October 31. (Round the cost per gallon to the nearest cent)

3. Suppose Le Monde Company has a new opportunity to sell PST-4 at the split off point for \$3.04 per gallon. Prepare an analysis showing whether the company should sell PST-4 at the split off point or continue to process this product further.

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#### Solution Preview

1. Determine Le Monde Company's allocation of joint production costs for the month of October. (Carry calculation of relative proportions to four decimal places)

Joint production costs will be allocated according to the net realizable value

HTP -3 PST-4 RJ-5 Total
Production 700000 350000 170000 1220000
Sales Price 3.2 4.8 4
Sales value 2240000 1680000 680000 4600000
Less further processing cost 699200 652800 48000 1400000
Net realizable value 1540800 1027200 632000 3200000
Proportion of Total Production 0.4815 0.3210 0.1975
Allocation of Joint costs 654840.0000 436560.0000 268600.0000 1360000

Allocation of Joint costs per ...

#### Solution Summary

This solution is comprised of a detailed explanation to determine Le Monde Company's allocation of joint production costs for the month of October.

\$2.19