Question

Valdosta Chemical Company manufactures two industrial chemical products in a joint process. In May, 10,000 gallons of input costing $60,000 were processed at a cost of $150,000. The joint process resulted in 8,000 pounds of Resoline and 2,000 pounds of Krypto. Resoline sells for $25 per pound, and Krypto sells for $50 per pound. Management generally processes each of these chemicals further in separable processes to produce more refined chemical products. Resoline is processed separately at a cost of $5 per pound. The resulting product, Resolite, sells for $35 per pound. Krypto is processed separately at a cost of $15 per pound. The resulting product, Kryptite, sells for $95 per pound. Required: 2-a. Allocate the company’s joint production costs for May using the physical-units method. 2-b. Allocate the company’s joint production costs for May using the relative-sales-value method. 2-c. Allocate the company’s joint production costs for May using the net-realizable-value method. 3-a. Valdosta’s management is considering an opportunity to process Kryptite further into a new product called Omega. The separable processing will cost $40 per pound. Packaging costs for Omega are projected to be $6 per pound, and the anticipated sales price is $130 per pound. Calculate the incremental profit or loss from processing Kryptite into Omega. 3-b. Should Kryptite be processed further into Omega? (The solutions to this problem that are already posted are not right and unclear please help!!!!!!

Answer 1