The Marketplace Corporation Produces Two Consumer Products and a By-Product

Essay

The Marketplace Corporation produces two consumer products and a by-product. Zylon is ready for sale after split-off, while Qytol must be further processed. The by-product is a heavy residue in the bottom of the vat. The net realizable value of the by-product is credited against the $565,000 joint cost of the Heating Department. Volume and cost data for February is as follows:
$$\begin{array} { l r r r } & \text { Gallons } & \text { Selling } & \text { Additional } \\& \text { Produced } & { \text { Price } } & \text { Processing } \\\text { Zylon } & 200,000 & \$ 2.00 & 0 \\\text { Qytol } & 400,000 & 1.10 & \$ 40,000 \\\text { By-Product } & 5,000 & 0.50 & 0\end{array}$$
Required:
a. Allocate the Heating Department cost to the products using the physical quantities method.
b. Allocate the Heating Department cost to the products using the estimated net realizable value (workback) method.