PR $19-3$B Joint cost allocation

Obj. $5$

MeKenzie's Soap Sensations, Inc, produces hand soaps with three different scents: morning glory, snowflake sparkle, and sea breeze. The soap is produced through a joint production process that costs $$30,000$ per batch. Exch batch produces $14,800$ bottles of morning glory hand soap, $12,000$ bottles of snowhake sparkle hand soap, and $10,000$ bottles of sea breeze hand soap at the split$-$of point. Wich product is processed further after the split$-$off point, but the market value of a botte of any of the flavors at this point is estimated to be $$1\mathrm{.}25$ per botIle. The additional processing costs of moming glory, snowflake sparkle, and sea breeze hand soap are $$0\mathrm{.}50,$$$0\mathrm{.}55,$ and $$0\mathrm{.}60$ per boule, respectively Morning glory, snowflake sparkle, and sea breeze hand soap are then sold for $52\mathrm{.}00,32\mathrm{.}20,$ and $$2,40$ per bottle, respectively.

Instructions

Using the net realizable walue method, allocate the join costs of production to each product.

Explain wly MeKenzies Soap Sensations, Inc, always chooses to process each variety of hand soap beyond the split$-$of point.

If demand tor all products was the same, which product should MeKenrie's Soap Sensations, Ine., pinduce in the highest quantity?