Davenport Company buys Alpha-11 for $6 a gallon. At the end of distilling in Dep

Question

Davenport Company buys Alpha-11 for $6 a gallon. At the end of distilling in Department A, Alpha-11 splits off into three products: Beta-1, Beta-2, and Beta-3. Davenport sells Beta-1 at the split-off point, with no further processing; it processes Beta-2 and Beta-3 further before they can be sold. Beta-2 is fused in Department B, and Beta-3 is solidified in Department C. Following is a summary of costs and other related data for the year ended November 30.

Davenport had no beginning inventories on hand at December 1 and no Alpha-11 on hand at the end of the year on November 30. All gallons on hand on November 30 were complete as to processing. Davenport uses the net realizable value method to allocate joint costs.

Required:

Compute the following:

a. The net realizable value of Beta-1 for the year ended November 30.

b. The joint costs for the year ended November 30 to be allocated.

c. The cost of Beta-2 sold for the year ended November 30. (Do not round intermediate calculations.)

d. The value of the ending inventory for Beta-1. (Do not round intermediate calculations.)

Department (1) Distilling (2) Fusing (3) Solidifying Cost of Alpha-11 $ 715,000 0 0 Direct labor 174,000 $ 340,000 $ 494,000 Manufacturing overhead 150,000 161,000 404,000

Explanation / Answer

a). Net Realizable Value of Beta 1 :-

= Sales - Distilling cost

= $740000 - $224688

= $515312

Allocation of Distilling cost to products :-

b) Joint cost is the cost incurred in distilling department, which is already calculated in part a.

c) Cost of Sale of Beta 2.

Allocation of Fusing cost to products :-

Cost of Sale of Beta 2 = Distilling Cost + Fusing Cost

= $271682 + $167151

= $438833

d). Value of Ending Inventory for Beta 1 :-

= $224688 * (121000/306000)

= $88847

Particulars Beta 1 Beta 2 Beta 3 Units Sold 185000 370000 555000 Add : Units in Ending Inventory 121000 0 184000 Units Produced 306000 370000 739000 Allocation of Distilling Cost(Total = $1039000) $224688 $271682 $542630

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.