The Los Alamos Chemical Company manufactures two products, X1 and X2, from a single input X....

 

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The Los Alamos Chemical Company manufactures two products, X1 and X2, from a single input X. During a recent month, 100,000 units of X were processed into 60,000 units of X1 and 40,000 units of unfinished X2 at a cost of $180,000. All units of X2 were completed at an additional cost of $20,000. The unit selling price of X1 and X2 are $2.00 and $3.50, respectively. (a) Determine the final unit cost of X1 and X2 when joint costs are allocated on the basis of net realizable value? (b) If X2 can be sold for $1.75 at the split-off point, should the management sell it then or process it further? The Los Alamos Chemical Company manufactures two products, X1 and X2, from a single input X. During a recent month, 100,000 units of X were processed into 60,000 units of X1 and 40,000 units of unfinished X2 at a cost of $180,000. All units of X2 were completed at an additional cost of $20,000. The unit selling price of X1 and X2 are $2.00 and $3.50, respectively. (a) Determine the final unit cost of X1 and X2 when joint costs are allocated on the basis of net realizable value? (b) If X2 can be sold for $1.75 at the split-off point, should the management sell it then or process it further?

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