Carina Company produces sanitation products after processing specialized chemicals; Thefollowing relates to its activities:1 Kilogram of chemicals purchased for $2000 and with an additional $1000 isprocessed into 400 grams of Crystals and 80 litres of a Cleaning agent. At split-off, agram of Crystal can be sold for $1 and the Cleaning agent can be sold for $4 per litre.At an additional cost of $400, Carina can process the 400 grams of Crystal into 500 grams of Detergent that can be sold for $2 per gram. The 80 litres of Cleaning agent is packaged at an additional cost of $300 and made into 200 packs of Softener that can be sold for $2 per pack.Required:1. Allocate the joint cost to the Detergent and the Softener using the following:a. Sales value at split-off method b. NRV method 2. Should Carina have processed each of the products further? What effect does the allocationmethod have on this decision? Make full references to Question 1 when possible

solve this problem, we'll first calculate the joint cost allocation using both the sales value at…

Answered: Carina Company produces sanitation…

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter19: Support Department And Joint Cost Allocation

Section: Chapter Questions

Problem 4CMA: Tucariz Company processes Duo into two joint products, Big and Mini. Duo is purchased in...

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Question

Carina Company produces sanitation products after processing specialized chemicals; The
following relates to its activities:

1 Kilogram of chemicals purchased for $2000 and with an additional $1000 is
processed into 400 grams of Crystals and 80 litres of a Cleaning agent. At split-off, a
gram of Crystal can be sold for $1 and the Cleaning agent can be sold for $4 per litre.
At an additional cost of $400, Carina can process the 400 grams of Crystal into 500 grams of Detergent that can be sold for $2 per gram. The 80 litres of Cleaning agent is packaged at an additional cost of $300 and made into 200 packs of Softener that can be sold for $2 per pack.

Required:

1. Allocate the joint cost to the Detergent and the Softener using the following:

a. Sales value at split-off method

b. NRV method

2. Should Carina have processed each of the products further? What effect does the allocation
method have on this decision? Make full references to Question 1 when possible

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