Joint Cost Allocation$$Net Realizable Value Method

Nature$$s Garden Inc. produces wood chips, wood pulp, and mulch. These products are produced through harvesting trees and sending the logs through a wood chipper machine. One batch of logs produces $20,784$ cubic yards of wood chips, $14,250$ cubic yards of mulch, and $9,326$ cubic yards of wood pulp. The joint production process costs a total of $$35,000$ per batch. After the split$-$off point, wood chips are immediately sold for $$22$ per cubic yard while wood pulp and mulch are processed further. The market value of the wood pulp and mulch at the split$-$off point is estimated to be $$26$ and $$29$ per cubic yard, respectively. The additional production process of the wood pulp costs $$5$ per cubic yard, after which it is sold for $$36$ per cubic yard. The additional production process of the mulch costs $$4$ per cubic yard, after which it is sold for $$39$ per cubic yard.

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below.

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Allocate the joint costs of production to each product using the net realizable value method. Do not round intermediate calculations. Round your answers to the nearest dollar.

Joint Product Allocation

Wood chips $fill in the blank $2$

Wood pulp fill in the blank $3$

Mulch fill in the blank $4$

Totals $fill in the blank $5$

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The net realizable value method allocates joint costs using each product's estimated net realizable value after it is fully processed. Products that have a higher net realizable value are allocated more joint costs. Net realizable value is the estimated selling price of a product less any costs necessary to further process the product beyond the split$-$off point.