Christiansen Corporation manufactures joint products W and X. During a recent period, joint costs amounted to $300,000 in the production of 20,000 gallons of W and 60,000 gallons of X. Both products will be processed beyond the split-off point, giving rise to the following data: $\begin{array}{lcc}
&\underline{\text {W}}&\underline{\text {X}}\
\text { Separable processing costs } & \$ 40,000 & \$ 160,000 \
\text { Sales price (per gallon) if processed beyond split-off } & \$ 14 & \$ 12
\end{array}$
The joint cost allocated to X under the net-realizable-value method would be:
A) $210,000.
B) $180,000.
C) $184,000.
D) $190,000.
E) None of the other answers are correct.

Question

Christiansen Corporation manufactures joint products W and X. During a recent period, joint costs amounted to $300,000 in the production of 20,000 gallons of W and 60,000 gallons of X. Both products will be processed beyond the split-off point, giving rise to the following data: $\begin{array}{lcc}
&\underline{\text {W}}&\underline{\text {X}}\
\text { Separable processing costs } & \$ 40,000 & \$ 160,000 \
\text { Sales price (per gallon) if processed beyond split-off } & \$ 14 & \$ 12
\end{array}$
 The joint cost allocated to X under the net-realizable-value method would be:
A) $210,000.
B) $180,000.
C) $184,000.
D) $190,000.
E) None of the other answers are correct.

Quizplus · Accepted Answer

The net realizable value (NRV) method allocates joint costs based on the final sales value minus separable costs. For X: NRV = (60,000 gallons * $12) - $160,000 = $560,000. For W: NRV = (20,000 gallons * $14) - $40,000 = $240,000. Total NRV = $560,000 + $240,000 = $800,000. Joint cost allocated to X = ($560,000 / $800,000) * $300,000 = $210,000.

Christiansen Corporation Manufactures Joint Products W and X The Joint Cost Allocated to X Under the Net-Realizable-Value Method