Napa Productions produces Salsa and Spaghetti Sauce from fresh tomatoes grown in its local greenhouse. The process is a joint process that produces juice and then is separated and two identifiable products are created. The joint cost to produce the products is $90,000 and results in the following data: Instructions:
a.Allocate the joint costs to each product using the NRV method.
b.Napa has identified a new marketable product by further processing the salsa. With an additional cost of $4,000, he can modify the salsa to create different spices. The gallons produced will not change, and the final sales value of the new product will be 26,000. Given this new information, reallocate the joint costs to each product using the NRV method.
c.Based on your calculations in part a, if Napa could sell the juice as is without processing it further into Spaghetti Sauce and Salsa with a marketable value of $$135,000, would you recommend the juice be sold as is or processed further?

Question

Napa Productions produces Salsa and Spaghetti Sauce from fresh tomatoes grown in its local greenhouse. The process is a joint process that produces juice and then is separated and two identifiable products are created. The joint cost to produce the products is $90,000 and results in the following data:  Instructions: 
a.Allocate the joint costs to each product using the NRV method.
b.Napa has identified a new marketable product by further processing the salsa. With an additional cost of $4,000, he can modify the salsa to create different spices. The gallons produced will not change, and the final sales value of the new product will be 26,000. Given this new information, reallocate the joint costs to each product using the NRV method.
c.Based on your calculations in part a, if Napa could sell the juice as is without processing it further into Spaghetti Sauce and Salsa with a marketable value of $$135,000, would you recommend the juice be sold as is or processed further?

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The Answer of Napa Productions produces Salsa and Spaghetti Sauce from fresh tomatoes grown in its local greenhouse. The process is a joint process that produces juice and then is separated and two identifiable products are created. The joint cost to produce the products is $90,000 and results in the following data:  Instructions: 
a.Allocate the joint costs to each product using the NRV method.
b.Napa has identified a new marketable product by further processing the salsa. With an additional cost of $4,000, he can modify the salsa to create different spices. The gallons produced will not change, and the final sales value of the new product will be 26,000. Given this new information, reallocate the joint costs to each product using the NRV method.
c.Based on your calculations in part a, if Napa could sell the juice as is without processing it further into Spaghetti Sauce and Salsa with a marketable value of $$135,000, would you recommend the juice be sold as is or processed further?

Napa Productions Produces Salsa and Spaghetti Sauce from Fresh Tomatoes $$135,000, Would You Recommend the Juice Be Sold as Is