Question

West Coast Designs produces three products: super, deluxe, and generic. Super and deluxe are its main...

West Coast Designs produces three products: super, deluxe, and generic. Super and deluxe are its main products; generic is a by-product of super. Information on the past month’s production processes follows.

  • In Department A, 252,000 units of the raw material X-1 are processed at a total cost of $379,220. After processing in Department A, 50 percent of the units are transferred to Department B, and 50 percent of the units (now unprocessed deluxe) are transferred to Department C.

  • In Department B, the materials received from Department A are processed at an additional cost of $246,000. Seventy percent of the units become super and are transferred to Department D. The remaining 30 percent emerge as generic and are sold at $6.00 per unit. The additional processing costs to make generic salable are $57,600.

  • In Department C, deluxe is processed at an additional cost of $880,000. A normal loss of 5 percent of the units of good output of deluxe occurs in this department. The remaining good output is then sold for $33 per unit.

  • In Department D, super is processed at an additional cost of $93,000. After this processing, super can be sold for $10 per unit.

Required:
Prepare a schedule showing the allocation of the $379,220 joint cost to super and deluxe using the estimated net realizable value approach. Revenue from the sale of by-products should be credited to the manufacturing costs of the related main product.

SCHEDULE

Super Deluxe
Sales value after completion ? ?
Sales revenue from generic ?
Separate processing costs
Department B ?
Department C ?
Department D ?
Additional processing cost for generic ?
Approximate net realizable values

COST ALLOCATION

Cost Allocation
Super
Deluxe

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