Hernandez Chemical Company’s production process for two of its solvents can be diagrammed using a process map as shown in Exhibit 12.24. The cost of the joint input, including processing costs before the split-off point, is €400,000.
Solvent A can be sold at the split-off point for €25 per liter and solvent B for €50 per liter. 

1. Allocate the €400,000 joint cost to solvents A and B by the physical-units method.
2. Allocate the €400,000 joint cost to solvents A and B by the relative-sales-value method.

Exhibit 12.24

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Other processes Indirect material Kilos €55,000 allocated cost Base material SOLVENT A 15,000 litres € 25 per litre Litres Processing machine Machine hours €220,000 € 80,000 allocated cost PRODUCTION PROCESS FOR SOLVENTS Other processes Litres or sales value Labour SOLVENT B 5,000 litres € 50 per litre Labour hours Other processes €45,000 allocated cost Split-off point