In: Accounting
Fisher Chemicals processes a liquid into three outputs: Sigma, Tau, and Upsilon. Sigma accounts for 58 percent of the net realizable value at the split-off point, Tau accounts for 28 percent, and Upsilon accounts for the balance. The joint costs total $641,000. If Upsilon is accounted for as a by-product, its $75,000 net realizable value at split-off is credited to the joint manufacturing costs using method 1 described in the text, which credits the by-product’s net realizable value as a reduction in the joint costs.
A. What are the allocated joint costs for the three outputs, if Upsilon is accounted for as a joint product?
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B. What are the allocated joint costs for the three outputs, if Upsilon is accounted for as a by-product? (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.)
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Answer A:
Accounted for as a joint product | |
Sigma | $ 371,780 |
Tau | $ 179,480 |
Upsilon | $ 89,740 |
Calculation:
Accounted for as a joint product | |
Sigma | =641000*58% |
Tau | =641000*28% |
Upsilon | =641000*14% |
Answer B:
Accounted for as a by- product | |
Sigma | $ 381,721 |
Tau | $ 184,279 |
Upsilon | $ - |
Calculation:
Accounted for as a by- product | |
Sigma | =(641000-75000)*58/86 |
Tau | =(641000-75000)*28/86 |
Upsilon | =(641000-75000)*0/86 |
In case of any doubt, please comment.