Baker Company Baker Company produces three products: A,B,and C from the same process.Joint costs for this production run are $2,100.

Pounds Sales price per lb. at split-off Disposal cost per lb. at split-off Further processing per pound Final sales price per pound

A 800 $6.50 $3.00 $2.00 $ 7.50

B 1,100 8.25 4.20 3.00 10.00

C 1,500 8.00 4.00 3.50 10.50

If the products are processed further,Baker Company will incur the following disposal costs upon sale: A,$3.00;B,$2.00;and C,$1.00. Refer to Baker Company.Using net realizable value at split-off,what amount of joint processing cost is allocated to Product C (round to the nearest dollar)?

Question

Baker Company Baker Company produces three products: A,B,and C from the same process.Joint costs for this production run are $2,100.

	Pounds	Sales price per lb. at split-off	Disposal cost per lb. at split-off	Further processing per pound	Final sales price per pound
A	800	$6.50	$3.00	$2.00	$ 7.50
B	1,100	8.25	4.20	3.00	10.00
C	1,500	8.00	4.00	3.50	10.50

If the products are processed further,Baker Company will incur the following disposal costs upon sale: A,$3.00;B,$2.00;and C,$1.00. Refer to Baker Company.Using 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 joint processing costs using net realizable value, we need to calculate the total net realizable value (NRV) for all three products.

Total NRV = revenue at split-off - disposal costs

Product A: $12.00 - $3.00 = $9.00 
Product B: $8.00 - $2.00 = $6.00 
Product C: $5.00 - $1.00 = $4.00

Total NRV = $9.00 + $6.00 + $4.00 = $19.00

To allocate joint costs to product C, we need to use the following formula: 
Joint cost allocated to C = (NRV of Product C / Total NRV) * Joint costs incurred

Joint cost allocated to C = ($4.00 / $19.00) * $2,100 = $442.11

Rounding this to the nearest dollar gives us an allocation of $451 to product C. Therefore, the correct answer is B ($951).

Baker Company Baker Company Produces Three Products: A,B,and C from the Same