Jordan, Inc. produces 2 products from a joint process costing $24,000. The results from the most recent period follow: $\begin{array}{lcccc}
&&\text { Sales Value }&\text {Separable}&\text { Sales Value After }\
\text { Product }&\text { Tons }&\text {at Split-Off } &\text { Costs }& \text { Further Processing }\
\text { Alpha-1 } & 800 & \$ 10,000 & \$ 12,000 & \$ 24,000 \
\text { Alpha-2 } & 400 & 8,000 & 4,000 & 20,000 \
\text { Waste } & 200 & -- & --- & --
\end{array}$

If Jordan uses the net realizable value method, the joint costs allocated to Alpha-1 would be:

Question

Jordan, Inc. produces 2 products from a joint process costing $24,000. The results from the most recent period follow: $\begin{array}{lcccc}
&&\text { Sales Value }&\text {Separable}&\text { Sales Value After }\
\text { Product }&\text { Tons }&\text {at Split-Off } &\text { Costs }& \text { Further Processing }\ 
\text { Alpha-1 } & 800 & \$ 10,000 & \$ 12,000 & \$ 24,000 \
\text { Alpha-2 } & 400 & 8,000 & 4,000 & 20,000 \
\text { Waste } & 200 & -- & --- & --
\end{array}$

If Jordan uses the net realizable value method, the joint costs allocated to Alpha-1 would be:

Quizplus · Accepted Answer

The net realizable value (NRV) method allocates joint costs based on the final value of products after further processing minus any separable costs. For Alpha-1, the NRV is calculated as the sales value after further processing ($24,000) minus separable costs ($12,000), resulting in $12,000. For Alpha-2, the NRV is the sales value after further processing ($20,000) minus separable costs ($4,000), resulting in $16,000. The total NRV for both products is $28,000 ($12,000 for Alpha-1 + $16,000 for Alpha-2). The joint costs allocated to Alpha-1 are then calculated as the proportion of Alpha-1's NRV to the total NRV, multiplied by the total joint costs: ($12,000 / $28,000) * $24,000 = $10,286.

Jordan, Inc If Jordan Uses the Net Realizable Value Method, the Joint