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

Arvin, Inc., produces two products, ins and outs, in a single process. The joint costs of this process were $60,000, and 15,000 units of ins and 34,000 units of outs were produced. Separable processing costs beyond the split-off point were as follows: ins, $110,000; outs, $420,000. Ins sell for $8.00 per unit; outs sell for $15.00 per unit.

Required:

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

	Allocated Joint Cost
Ins	$fill in the blank 1
Outs	$fill in the blank 2

2. Suppose that ins could be sold at the split-off point for $7.00 per unit. Should Arvin sell ins at split-off or process them further? Ins

shouldshould not

be processed further as there will be $fill in the blank 4

lessmore

profit if sold at split-off.