Fletcher Fabrication, Inc., produces three products by a joint production proces

Question

Fletcher Fabrication, Inc., produces three products by a joint production process. Raw materials are put into production in Department X, and at the end of processing in this department, three products appear. Product A is sold at the split-off point with no further processing. Products B and C require further processing before they are sold. Product B is processed in Department Y, and product C is processed in Department Z. The company uses the estimated net realizable value method of allocating joint production costs. Following is a summary of costs and other data for the quarter ended June 30 No inventories were on hand at the beginning of the quarter. No raw material was on hand at June 30. All units on hand at the end of the quarter were fully complete as to processing Products Pounds sold Pounds on hand at June 30 Sales revenues 20,000 57,000 65,000 0 37,000 $ 46,000 $273,600 $341,250 55,000 0 S Raw material cost Direct labor cost Manufacturing overhead $161,000 S 72,000 92,000 282,500 29,000 31,600 101,000 Required a. Determine the following amounts for each product: (Do not round intermediate calculations.) (1) Estimated net realizable value used for allocating joint costs Estimated net realizable values Product Product A Product B Product C Total

Explanation / Answer

Estimated Net Relizable value Product A Product B Product C Raw material 161000 0 0 Direct labor 72000 92000 282500 Manufacturing overhead 29000 31600 101000 Total cost 262000 123600 383500 No,. Of pounds produced 75000 57000 102000 Cost per unit 3.49 2.17 3.76 Sales revenue 46000 273600 341250 No. of units sold 20000 57000 65000 Selling price per pound A 2.30 4.80 5.25 No,. Of pounds produced B 75000 57000 102000 Gross realizable value A*B 172500 273600 535500 Less: Cost of seprate processing Direct labor 92000 282500 Manufacturing overhead 31600 101000 Net relaizable cvalue 172500 150000 152000 ans NRV Product A 172500 Product B 150000 Product C 152000

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