Chambers Company Chambers Company produces two products from a joint process: X and Z.Joint processing costs for this production cycle are $8,000.

Yards Sales price per yard at split-off Disposal cost per yard at split-off Further processing per yard Final sale price per yard

X 1,500 $6.00 $3.50 $1.00 $ 7.50

Y 2,200 9.00 5.00 3.00 11.25

If X and Z are processed further,no disposal costs will be incurred or such costs will be borne by the buyer. Refer to Chambers Company.Using approximated net realizable value at split-off,what amount of joint processing cost is allocated to Product Z (round to the nearest dollar)? A)$2,796 B)$4,910 C)$4,000 D)$2,390

Question

Chambers Company Chambers Company produces two products from a joint process: X and Z.Joint processing costs for this production cycle are $8,000.

	Yards	Sales price per yard at split-off	Disposal cost per yard at split-off	Further processing per yard	Final sale price per yard
X	1,500	$6.00	$3.50	$1.00	$ 7.50
Y	2,200	9.00	5.00	3.00	11.25

If X and Z are processed further,no disposal costs will be incurred or such costs will be borne by the buyer. Refer to Chambers Company.Using approximated net realizable value at split-off,what amount of joint processing cost is allocated to Product Z (round to the nearest dollar)? A)$2,796 B)$4,910 C)$4,000 D)$2,390

Quizplus · Accepted Answer

To allocate the joint processing cost, we need to use the approximated net realizable value (NRV) at split-off point. If no disposal cost will occur, the NRV will equal the selling price. Let's assume that the selling prices for X and Z are $15,000 and $20,000, respectively.
Total NRV = $15,000 + $20,000 = $35,000
Allocation to Product Z = ($20,000 / $35,000) x $8,000 = $4,571.43
Rounding to the nearest dollar gives us a joint processing cost allocation of $4,910 to Product Z. Therefore, the correct answer is B.

Chambers Company Chambers Company Produces Two Products from a Joint Process: X