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Problem 11-59 Estimated Net Realizable Value and Effects of Processing Further (LO 11-7, 9)

Fletcher Fabrication, Inc., produces three products by a joint production process. Raw materials are put into production in Department X, and at the end of processing in this department, three products appear. Product A is sold at the split-off point with no further processing. Products B and C require further processing before they are sold. Product B is processed in Department Y, and product C is processed in Department Z. The company uses the estimated net realizable value method of allocating joint production costs. Following is a summary of costs and other data for the quarter ended June 30.

No inventories were on hand at the beginning of the quarter. No raw material was on hand at June 30. All units on hand at the end of the quarter were fully complete as to processing.

Products	A			B			C
Pounds sold		21,000			63,000			72,000
Pounds on hand at June 30		45,000			0			39,000
Sales revenues	$	13,650		$	110,250		$	129,600

Departments	X			Y			Z
Raw material cost	$	59,000		$	0		$	0
Direct labor cost		26,500			42,550			99,800
Manufacturing overhead		12,000			9,000			33,175

Required:

(a)	Determine the following amounts for each product. (Do not round intermediate calculations. Round your answer to the nearest dollar amount. Leave no cells blank - be certain to enter "0" wherever required.)

(1)

Estimated net realizable value used for allocating joint costs. Prooduct Joint Costs Product A ? Product B ? Product C ? Total $ (2) Joint costs allocated to each of the three products. Products Joint Costs Product A ? Product B ? Product C ? Total $ (3) Cost of goods sold Cost of goods sold Product A ? Product B ? Product C ? Totals $ (4) Finished goods inventory costs, June 30 Ending Inventory Product A ? Product B ? Product C ? Totals $ (b) Assume that the entire output of product A could be processed further at an additional cost of $1.75 per pound and then sold for $4.60 per pound. Compute the incremental income from further processing A. Incremental Income ? (c) Considering the results of part b, should the company process product A further? Yes or No

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