Joint Cost AllocationNet Realizable Value Method Natures Garden Inc. produces wood chips, wood pulp, and...
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Joint Cost AllocationNet Realizable Value Method
Natures Garden Inc. produces wood chips, wood pulp, and mulch. These products are produced through harvesting trees and sending the logs through a wood chipper machine. One batch of logs produces 20,400 cubic yards of wood chips, 10,400 cubic yards of mulch, and 9,200 cubic yards of wood pulp. The joint production process costs a total of $34,000 per batch. After the split-off point, wood chips are immediately sold for $25 per cubic yard while wood pulp and mulch are processed further. The market value of the wood pulp and mulch at the split-off point is estimated to be $22 and $25 per cubic yard, respectively. The additional production process of the wood pulp costs $5 per cubic yard, after which it is sold for $30 per cubic yard. The additional production process of the mulch costs $4 per cubic yard, after which it is sold for $27 per cubic yard.
Allocate the joint costs of production to each product using the net realizable value method.
Joint Product
Allocation
Wood chips
$fill in the blank 1
Wood pulp
fill in the blank 2
Mulch
fill in the blank 3
Totals
$fill in the blank 4
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