Riley Company Riley Company produces two products from a joint process: A and C.Joint processing costs for this production cycle are $9,000.

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

A 1,800 $7.00 $4.50 $1.50 $ 8.00

C 2,600 10.00 6.00 3.50 12.25

If A and C are processed further,no disposal costs will be incurred or such costs will be borne by the buyer. Refer to Riley Company.Using net realizable value at split-off,what amount of joint processing cost is allocated to Product A (round to the nearest dollar)?

Question

Riley Company Riley Company produces two products from a joint process: A and C.Joint processing costs for this production cycle are $9,000.

	Yards	Sales price per yard at split-off	Disposal cost per yard at split-off	Further processing per yard	Final sale price per yard
A	1,800	$7.00	$4.50	$1.50	$ 8.00
C	2,600	10.00	6.00	3.50	12.25

If A and C are processed further,no disposal costs will be incurred or such costs will be borne by the buyer. Refer to Riley Company.Using net realizable value at split-off,what amount of joint processing cost is allocated to Product A (round to the nearest dollar)?

Quizplus · Accepted Answer

To allocate the joint processing costs using the net realizable value (NRV) method at split-off, we first calculate the NRV for each product at split-off. NRV is calculated as the sales price per yard minus any disposal costs at split-off (since further processing costs and final sale prices are not considered at split-off for NRV calculation).For Product A:- Sales price per yard = $7.00- Disposal cost per yard = $4.50- NRV per yard = $7.00 - $4.50 = $2.50- Total NRV for Product A = $2.50 * 1,800 yards = $4,500For Product C:- Sales price per yard = $10.00- Disposal cost per yard = $6.00- NRV per yard = $10.00 - $6.00 = $4.00- Total NRV for Product C = $4.00 * 2,600 yards = $10,400Total NRV for both products = $4,500 (A) + $10,400 (C) = $14,900The proportion of joint processing costs allocated to Product A is calculated as the ratio of Product A's NRV to the total NRV of both products:- Allocation to A = ($4,500 / $14,900) * $9,000 = $2,718 (rounded to the nearest dollar)Therefore, $2,718 of the joint processing cost is allocated to Product A.

Riley Company Riley Company Produces Two Products from a Joint Process: a Process