Answer (D) is correct . The NRV of Alfa is $20,000 [10,000 pounds × ($4 selling price – $2 additional processing costs)] , and the NRV of Betters is $40,000 [5,000 pounds × ($10 selling price – $2 additional processing costs)]. If the joint cost is not adjusted for the value of the by-production, the amount allocated to Betters is $62,000 {[$40,000 ÷ ($20,000 + $40,000)] × $93,000}.
Answer (A) is incorrect because The amount of $30,000 is the amount allocated to Alfa when the by-product is inventoried.
Answer (B) is incorrect because The amount of $31,000 is the amount allocated to Alfa when the by-product is not inventoried.
Answer (C) is incorrect because The amount of $52,080 assumes that a weighting method using caloric value is used.
|
Assuming Atlas Foods does not inventory Morefeed, the by-product, the joint cost to be allocated to Betters using the net realizable value method is
