Jagger, Inc. production begins in Department A with 1,000 kilograms of material, of which 40% goes to Department B, 50% to Department C, and the rest evaporates. From Department C, 72% goes to Department D, 24% to Department E, and the remainder is scrapped. There are no intermediate markets. By-product sales are treated as miscellaneous income. The following occurred during the month: $$\begin{array} { l r c l }
\text { Department } & { \text { Costs } } & \text { Sales } & \text { Product Type } \
\text { A } & \$ 20,000 & - - - & \
\text { B } & 5,000 & \$ 10,000 & \text { By-product } \
\text { C } & 30,000 & - - & \
\text { D } & 20,000 & 60,000 & \text { Main-1 } \
\text { E } & 10,000 & 30,000 & \text { Main-2 }
\end{array}$$ If Jagger uses the net realizable value method, the total cost of Main-2 is:

Question

Jagger, Inc. production begins in Department A with 1,000 kilograms of material, of which 40% goes to Department B, 50% to Department C, and the rest evaporates. From Department C, 72% goes to Department D, 24% to Department E, and the remainder is scrapped. There are no intermediate markets. By-product sales are treated as miscellaneous income. The following occurred during the month: $$\begin{array} { l r c l } 
\text { Department } &  { \text { Costs } } & \text { Sales } & \text { Product Type } \
\text { A } & \$ 20,000 & - - - & \
\text { B } & 5,000 & \$ 10,000 & \text { By-product } \
\text { C } & 30,000 & - - & \
\text { D } & 20,000 & 60,000 & \text { Main-1 } \
\text { E } & 10,000 & 30,000 & \text { Main-2 }
\end{array}$$ If Jagger uses the net realizable value method, the total cost of Main-2 is:

Quizplus · Accepted Answer

The total cost of Main-2 is $26,667. This is calculated by taking the cost of Department C ($30,000) and multiplying it by the percentage of output that goes to Department E (24%). This gives us a cost of $7,200. We then add to this the cost of Department E ($10,000), which gives us a total cost of $17,200. Finally, we add to this the net realizable value of the by-product from Department B ($10,000), which gives us a total cost of $26,667.

Jagger, Inc If Jagger Uses the Net Realizable Value Method, the Total