Elsa Products processes Chem-Z into two products: Chem-A and Chem-B. Chem-Z costs $42,000 per batch. The joint process produces 11,250 units of Chem-A with a market value of $135,000, and 20,000 units of Chem-B with a market value of $33,750. The conversion cost of the joint process is $13,400 per batch. Elsa Products allocates joint costs using the physical quantities method. The company never holds any inventory.Required:What cost (total, not unit) and profit will be reported for each product using the current method for allocating joint costs?If the costs of the joint process are allocated on the basis of the net realizable value of the products, what cost (total, not unit) and profit will be reported for each product?How much will profit at Elsa Products increase or decrease if the company switches to the net realizable value method for allocating joint process costs? Required A Required B Required CWhat cost (total, not unit) and profit will be reported for each product using the current method for allocating joint costs?Note: Do not round intermediate calculations. Amounts to be deducted should be indicated by a minus sign.Realizable valueAllocation of joint costReported profitChem-AChem-B< Required ARequired B > Required ARequired B Required CIf the costs of the joint process are allocated on the basis of the net realizable value of the products, what cost (total, notunit) and profit will be reported for each product?Note: Do not round intermediate calculations.Realizable valueAllocation of joint costReported profitChem-AChem-B< Required ARequired C >

Joint costs means the costs incurred in producing multiple products simultaneously from the same raw…

Answered: Elsa Products processes Chem-Z into two…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 4SEQ: For which cost concept used in applying (he cost-plus, approach to product pricing are fixed...

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Required:

What cost (total, not unit) and profit will be reported for each product using the current method for allocating joint costs?
If the costs of the joint process are allocated on the basis of the net realizable value of the products, what cost (total, not unit) and profit will be reported for each product?
How much will profit at Elsa Products increase or decrease if the company switches to the net realizable value method for allocating joint process costs?

Required A
Required B Required C
If the costs of the joint process are allocated on the basis of the net realizable value of the products, what cost (total, not
unit) and profit will be reported for each product?
Note: Do not round intermediate calculations.
Realizable value
Allocation of joint cost
Reported profit
Chem-A
Chem-B
< Required A
Required C >

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