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# Joint Costs for Skanda Corporation

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Skanda Corporation manufactures two chemicals (Flextra and Hydro) in a joint process. Data from a recent month follow.
Costs:
Direct materials used \$360,000
Direct labor \$150,000
Manufacturing overhead \$690,000
Manufacturing output:
Flextra 40,000 gallons
Hydro 120,000 gallons
Flextra sells for \$15 per gallon and Hydro sells for \$20 per gallon.
Required:
1. Compute the total joint costs to be allocated.
2. Compute the joint costs that would be allocated to Flextra by using the physical-units method.
3. Compute the joint costs that would be allocated to Hydro by using the relative-sales-value method.
4. Assume that Hydro can be converted into a more refined product, Hydro-R, in a totally separable process at an additional cost of \$4 per gallon. If the refined product can be sold in the marketplace for \$26 per gallon, should Skanda process do the additional processing? Briefly explain.

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#### Solution Summary

The expert examines a joint costs for Skanda Corporation. The total joint costs are determined.

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