Net Realizable Value Method, Decision to Sell at Split-off or Process Further

Pacheco, Inc., produces two products, overs and unders, in a single process. The joint costs of this process were $60,000, and 14,000 units of overs and 34,000 units of unders were produced. Separable processing costs beyond 

the split-off point were as follows: overs, $18,000; unders, $16,760. Overs sell for $2.00 per unit; unders sell for $3.14 per unit.

 

Required:

1. Allocate the $60,000 joint costs using the estimated net realizable value method.

Allocated Joint Cost

Overs $

Unders $

2. Suppose that overs could be sold at the split-off point for $1.80 per unit. Should Pacheco sell overs at split-off or process them further? Overs ________ be processed further as there will be $_______ . ____________ profit if sold at 

split-off.