Question

Euclid Corporation processes a patented chemical, P-1, and produces two outputs, P-11 and P-12. In August, the costs to process P-1 are $165,000 for materials and $250,000 for conversion costs. P-11 has a sales value of $688,000 and P-12 has a sales value of $172,000. Required Using the net realizable value method, assign costs to P-11 and P-12 for August. (Do not round intermediate calculations.)

Answer 1

for P-11 = $ 332,000

for P-12 = $ 83,000

Step-by-step explanation:

Given:

Cost to process P-1 = $165,000

Cost for the conversion of P-1 = $ 250,000

Sales value of P-11 = $ 688,000

sales value of P-12 = $ 172,000

now,

Total joined cost for P-1 = $ 165,000 + $ 250,000 = $ 415,000

Now,

the cost assigned to P-11 will be calculated as:

[(selling cost of P-11) / (Total selling cost)] × Total joint cost of P-1

on substituting the values, we have

( $ 688,000 / ($ 688,000 + $ 172,000) ) × $ 415,000 = $ 332,000

and,

the cost assigned to P-12 will be calculated as:

[(selling cost of P-12) / (Total selling cost)] × Total joint cost of P-1

on substituting the values, we have

( $ 172,000 / ($ 688,000 + $ 172,000) ) × $ 415,000 = $ 83,000