The Marketplace Corporation produces two consumer products and a by-product. Zylon is ready for sale after split-off, while Qytol must be further processed. The by-product is a heavy residue in the bottom of the vat. The net realizable value of the by-product is credited against the $565,000 joint cost of the Heating Department. Volume and cost data for February is as follows:
$$\begin{array} { l r r r }
& \text { Gallons } & \text { Selling } & \text { Additional } \
& \text { Produced } & { \text { Price } } & \text { Processing } \
\text { Zylon } & 200,000 & \$ 2.00 & 0 \
\text { Qytol } & 400,000 & 1.10 & \$ 40,000 \
\text { By-Product } & 5,000 & 0.50 & 0
\end{array}$$
Required:
a. Allocate the Heating Department cost to the products using the physical quantities method.
b. Allocate the Heating Department cost to the products using the estimated net realizable value (workback) method.

Question

The Marketplace Corporation produces two consumer products and a by-product. Zylon is ready for sale after split-off, while Qytol must be further processed. The by-product is a heavy residue in the bottom of the vat. The net realizable value of the by-product is credited against the $565,000 joint cost of the Heating Department. Volume and cost data for February is as follows:
 $$\begin{array} { l r r r } 
& \text { Gallons } & \text { Selling } & \text { Additional } \
& \text { Produced } & { \text { Price } } & \text { Processing } \
\text { Zylon } & 200,000 &  \$ 2.00 & 0 \
\text { Qytol } & 400,000 & 1.10 & \$ 40,000 \
\text { By-Product } & 5,000 & 0.50 & 0
\end{array}$$ 
Required:
a. Allocate the Heating Department cost to the products using the physical quantities method.
b. Allocate the Heating Department cost to the products using the estimated net realizable value (workback) method.

Quizplus · Accepted Answer

The Answer of The Marketplace Corporation produces two consumer products and a by-product. Zylon is ready for sale after split-off, while Qytol must be further processed. The by-product is a heavy residue in the bottom of the vat. The net realizable value of the by-product is credited against the $565,000 joint cost of the Heating Department. Volume and cost data for February is as follows:
 $$\begin{array} { l r r r } 
& \text { Gallons } & \text { Selling } & \text { Additional } \
& \text { Produced } & { \text { Price } } & \text { Processing } \
\text { Zylon } & 200,000 &  \$ 2.00 & 0 \
\text { Qytol } & 400,000 & 1.10 & \$ 40,000 \
\text { By-Product } & 5,000 & 0.50 & 0
\end{array}$$ 
Required:
a. Allocate the Heating Department cost to the products using the physical quantities method.
b. Allocate the Heating Department cost to the products using the estimated net realizable value (workback) method.

The Marketplace Corporation Produces Two Consumer Products and a By-Product