Quick Systems Inc produces three products T, U, V. Each product can be sold at split off: T ($6…

Quick Systems Inc produces three products T, U, V. Each product can be sold at split off: T ($6…

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Quick Systems Inc produces three products T, U, V. Each product can be sold at split off: T ($6…
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Quick Systems Inc produces three products T, U, V. Each product can be sold at split off: T ($6
per unit), U ($6.50 per unit) and V ($7.5 per unit). All three products can be further processed to
make TT,UU, and VV. A fourth product, H, is a by-product of the production process. Product H can
be sold for $2 per unit with additional processing. H is processed at split-off point. At all times by-
products are assigned joint cost based on NRV. During April the joint costs of production were
$350,000. Production, additional processing costs, and sales value after additional processing
information for the month are as follows:
Product Units Selling price per unit(after further processing)
18,000 $8
20,000 $12
30,000 $12
10,000 $2
TT
UU
VV
H
Additional Processing Cost
$40,000
$90,000
$114,000
$5,000
Required:
a. Determine the amount of joint cost allocated to each product if allocation is by NRV of final
product. (6 marks)
b. Which products should be processed further beyond splitoff point

Expert Answer:

Answer rating: 100% (QA)

a To determine the amount of joint cost allocated to each product using the Net Realizable Value NRV
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