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 litres, of which 40% are G and 60% are H. The selling price of G is $8.75 per litre, and the selling price of H is $15.00 per litre.
Required:
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 has discovered a new process by which G can be refined into Product GG, which has a sales price of $12 per litre. This additional processing would increase costs by $2.10 per litre. Assuming there are no other changes in costs, should the company use the new process? Show calculations.

Correct Answer:

Verified

Show Answer