Riverside Company Manufactures G and H in a Joint Process

Riverside Company manufactures G and H in a joint process.The joint costs amount to $80,000 per batch of finished goods.Each batch yields 20,000 liters,of which 40% are G and 60% are H.The selling price of G is $8.75 per liter,and the selling price of H is $15.00 per liter.
Required:
A.Each batch of 20,000 liters yields 8,000 liters of G (40%)and 12,000 liters of H (60%).Thus,the sales values at split-off are: G,$70,000 (8,000 * $8.75)and H,$180,000 (12,000 * $15.00),for a total of $250,000.The joint cost allocation is:
G: ($70,000 / $250,000)* $80,000 = $22,400
H: ($180,000 /$250,000)*$80,000 = $57,600
A.If the joint costs are allocated on the basis of the products' sales value at the split-off point,what amount of joint cost will be charged to each product?
B.

Riverside should go ahead with the new process as it is profitable for the firm.
B.Riverside has discovered a new process by which G can be refined into Product GG,which has a sales price of $12 per liter.This additional processing would increase costs by $2.10 per liter.Assuming there are no other changes in costs,should the company use the new process? Show calculations.

Correct Answer:

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A.Each batch of 20,000 liters yields 8,0...

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