Wyalusing Chemicals uses a joint process to produce MJ-4, a chemical used in the manufacture of paints and varnishes; HD-10, a chemical used in household cleaning products; and FT-5, a by-product that is sold to fertilizer manufacturers. Joint production costs are allocated to the main products on the basis of net realizable value. The by-product is inventoried at its net realizable value, and this value is used to reduce the joint production cost before allocation to the main products.
During the month of November, Wyalusing incurred joint production costs of $3,136,000. Data regarding Wyalusing’s November operations are as follows:

1. Define the terms joint costs and split-off point.
2. Determine the dollar values of Wyalusing Chemicals’ finished-goods inventories on November 30 for MJ-4 and HD-10.
3. Wyalusing Chemicals has an opportunity to sell HD-10 for its sales value at the split-off point. Determine if management should sell HD-10 at the split-off point or continue to process it further.

  • CreatedApril 22, 2014
  • Files Included
Post your question