Zephyr Chemical Company’s production process for two of its solvents can be diagrammed as follows:

The cost of the joint input, including processing costs before the split-off point, is $100,000. Solvent A can be sold at split-off for $10 per gallon and solvent B for $15 per gallon.

1. Allocate the $100,000 joint cost to solvents A and B by the physical-units method.

2. Allocate the $100,000 joint cost to solvents A and B by the relative-sales-value method.

Transcribed Image Text:

solvent A 9,000 gallons joint input 15,000 gallons split-off point solvent B 6,000 gallons