Question

Net Realizable Value Method, Decision to Sell at Split-off or Process Further Arvin, Inc., produces two products, ins and outs, in a single process. The joint costs of this process were $50,000, and 13,000 units of ins and 36,000 units of outs were produced. Separable processing costs beyond the split-off point were as follows: ins, $94,000; outs, $450,000. Ins sell for $8.00 per unit; outs sell for $15.00 per unit. Required: 1. Allocate the $50,000 joint costs using the estimated net realizable value method. Allocated Joint Cost Ins: $fill in the blank 1 Outs: $fill in the blank 2 2. Suppose that ins could be sold at the split-off point for $7.00 per unit. Should Arvin sell ins at split-off or process them further? Ins should not be processed further as there will be $fill in the blank 4 less profit if sold at split-off.

          Net Realizable Value Method, Decision to Sell at Split-off or Process Further

Arvin, Inc., produces two products, ins and outs, in a single process. The joint costs of this process were $50,000, and 13,000 units of ins and 36,000 units of outs were produced. Separable processing costs beyond the split-off point were as follows: ins, $94,000; outs, $450,000. Ins sell for $8.00 per unit; outs sell for $15.00 per unit.

Required:
1. Allocate the $50,000 joint costs using the estimated net realizable value method.

Allocated Joint Cost
Ins: $fill in the blank 1
Outs: $fill in the blank 2

2. Suppose that ins could be sold at the split-off point for $7.00 per unit. Should Arvin sell ins at split-off or process them further?

Ins should not be processed further as there will be $fill in the blank 4 less profit if sold at split-off.

Added by Ricardo S.

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