Essay
Arnold Company processes raw material in Department 1 from which come two main products,A and B,and a by-product,
C.A is further processed in Department 2,B in Department 3,and C in Department 4.The value of the by-product reduces the cost of the main products,and sales value is used to allocate joint costs.
| Dept 1 | Dept 2 | Dept 3 | Dept 4 | |
|---|---|---|---|---|
| Cost Incurred: | $90,000 | $10,000 | $8,000 | $10,000 |
| Production: | ||||
| A | 10,000 lbs. | |||
| B | 20,000 lbs. | |||
| C | 10,000 lbs. | |||
| Selling Price: | ||||
| A | $10/lb. | |||
| B | $5/lb. | |||
| C | $2/lb. |
a. Commute unit costs for A and B Commute unit costs for A and B
b. Ending inventoty consists of 5,000 lbs. of B and 1,000 lbs. of C. What is the value of the inventoty?
Ending inventoty consists of 5,000 lbs. of B and 1,000 lbs. of C. What is the value of the inventoty?
c. Recompute a and b allocating cost based on net realizable value
Recompute a and b allocating cost based on net realizable value
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