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 approximated net realizable value at split-off,what amount of joint processing cost is allocated to Product C (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 approximated net realizable value at split-off,what amount of joint processing cost is allocated to Product C (round to the nearest dollar)?

Quizplus · Accepted Answer

To allocate the joint processing costs using the net realizable value (NRV) method at split-off, first calculate the NRV for each product at split-off. NRV is calculated as the sales price per yard minus any disposal costs (since further processing costs are not considered at split-off). For Product A: NRV = $7.00 - $4.50 = $2.50 per yard. For Product C: NRV = $10.00 - $6.00 = $4.00 per yard. Then, calculate the total NRV for both products and the proportion of the total NRV that each product represents. Total NRV = (1,800 yards * $2.50) + (2,600 yards * $4.00) = $4,500 + $10,400 = $14,900. Product C's proportion of total NRV = $10,400 / $14,900. Finally, allocate the joint processing costs to Product C based on this proportion: $9,000 * ($10,400 / $14,900) ≈ $5,986.

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