Question: Requirement 4. The company has discovered an additional process by which the methanol (wood alcohol) can be made into a pleasant-tasting alcoholic beverage. Assuming

Requirement 4. The company has discovered an additional process by which the

Requirement 4. The company has discovered an additional process by which the methanol (wood alcohol) can be made into a pleasant-tasting alcoholic beverage. Assuming no other changes in cost other than those stated in the requirement, what is the joint cost applicable to the ethanol (using the NRV method)? Should the company produce the ethanol? Show your computations (Round the weightings to five decimal places. Round joint costs allocated to the nearest dollac) Lab Ethanol Final sales value of total production Turpentine $ 126,000 Total 18.000 Deduct separable costs S 108.000 NRV at splitoff point Weighting Joint costs allocated Requirement information 1.00000 $ 144.000 The selling price of this product would be $18 a litre. Additional processing would increase separable cost $2.70 per litre (in addition to the $0.90 per litre separable cost required to yield methanol) The company would have to pay excise taxes of 20% on the selling price of the product

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