Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. terrace labs produces a drug used for the treatmen

Terrace Labs produces a drug used for the treatment of arthritis. The drug is produced in...

Free

90.2K

Verified Solution

Question

Accounting

Terrace Labs produces a drug used for the treatment ofarthritis. The drug is produced in batches.

In March?, Terrace?,which had no opening? inventory, processedone batch of chemicals. It sold 2,100 gallons of product for humanuse and 500 gallons of the veterinarian product. Terrace uses thenet realizable value method for allocating joint productioncosts.

Chemicals costing $54,000 are mixed and? heated, then a uniqueseparation process then extracts the drug from the mixture. A batchyields a total of 2,800 gallons of the chemicals. The first 2,200gallons are sold for human use while the last 600 ?gallons, whichcontain? impurities, are sold to veterinarians. The costs of?mixing, heating, and extracting the drug amount to $153,000 perbatch. The output sold for human use is pasteurized at a total costof $123,200 and is sold for $640 per gallon. The product sold toveterinarians is irradiated at a cost of $15 per gallon and is soldfor $480 per gallon.

Requirement 1. How much in joint costs does Terrace allocate toeach? product? ?(Do not round intermediary calculations. Only roundthe amount you input in the cell to the nearest? dollar.)

Joint costs allocated to human product

  

Joint costs allocated to veterinarian product

Answer & Explanation Solved by verified expert
4.1 Ratings (763 Votes)

Joint Cost Allocation :

Joint cost for Human Product 170,068.81 ('207000/(1284800+279000)*1284800)
Joint cost for Veternity Product     36,931.19 ('207000/(1284800+279000)*279000)

Workign Notes :

A. Calulation of Total Cost

Chemical Cost     54,000.00
Mixingm Heating etc 153,000.00
Total Cost 207,000.00

B. Net Realisable Value calculation

Particulars Quantity Rate per unit Total
Human Consumpiton       2,200.00     640.00 1,408,000.00
Less : Specifc cost of pasteurized      123,200.00
Net Realisation 1,284,800.00
Veternity Consumption          600.00     480.00      288,000.00
Specific cost if irradication          600.00        15.00          9,000.00
     279,000.00

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Statistics
1.2K views

prisluGQING ess Statistics SP1 2023 Assignment 5 H pd

Accounting
1.2K views

Net Present Value MethodThe following data are accumulated by Paxton Company inevaluating the purchase...Net...

Finance
1.2K views

An investor has two bonds in his portfolio that have a face value of $1,000 and...

Basic Math
1.2K views

a comprehensive example (not just a data set - a concept) showing how the mean is effected...

Biology
1.2K views

NOT influence enzyme activity Removing a cofactor The presence of a competitive inhibitor O Decreasing...

Biology
1.2K views

If people are described as fugitives from justice which statement is most likely to be...

Geometry
1.2K views

Question 4 Multiple Choice Worth 4 points 01 02 MC Ben uses a compass and...

Calculus
1.2K views

Determine all the values of 0 in the following equation if 0 0 2 12sin...

Accounting
1.2K views

Mercedes, Co. has the following quarterly financial information. ...

Accounting
1.2K views

Sunland Company purchased equipment on January 1, 2021 for $121,500. It is estimated that the...

Accounting
1.2K views

Design and Evaluate a New Financial Product for Investment Banks to sell in the emerging...

Finance
1.2K views

How much money will round tree raise? Example of their method below. DIFFERENT NUMBERS. Wrong...