Euclid Corporation processes a patented chemical, P-1, and
produces two outputs, P-11 and P-12. In August,...
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Euclid Corporation processes a patented chemical, P-1, andproduces two outputs, P-11 and P-12. In August, the costs toprocess P-1 are $165,000 for materials and $280,000 for conversioncosts. P-11 has a sales value of $688,000 and P-12 has a salesvalue of $172,000. Required Using the net realizable value method,assign costs to P-11 and P-12 for August. (Do not roundintermediate calculations.)
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CALCULATION OF COST OF THE PRODUCT P-11 & P-12
UNDER NET REALIZABLE METHOD
P-11
P-12
Total
Sales
$
6,88,000
$
1,72,000
$ 8,60,000
Ratio
0.80
0.20
Ratio Or
4/5
1/5
Cost of Material (A)
$
1,32,000
$
33,000
$ 1,65,000
($ 165,000 X 80%)
($ 165,000 X 20%)
Conversion Cost (B)
$
2,24,000
$
56,000
$ 2,80,000
($ 280,000 X 80%)
($ 280,000 X 20%)
Total Cost of P11 & P12 (A+B)
$
3,56,000
$
89,000
$ 4,45,000
Answer =
Cost of P-11
$
3,56,000
Cost of P-12
$
89,000
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