Question: Products M1 and M2 needed further processing with additional costs before they could be marketable. Product M3 was immediately available for sale. The following diagram

Products M1 and M2 needed further processing with additional costs before they could be marketable. Product M3 was immediately available for sale. The following diagram shows the process.

M1

Processing cost $120,000, Sales value $300,000

Joint costs $450,000

M2

Processing cost $80,000, Sales value $400,000

M3

Sales value $500,000

Required:

Allocate the joint costs to the products using the estimated net realizable value method.

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