Toledo Chemical Company buys A-123 for \$2.40 a gallon. At the end of distilling in Department 1, A-123

September 10, 2016

Question
Toledo Chemical Company buys A-123 for \$2.40 a gallon. At the end of distilling in Department 1, A-123 splits off into three products: B-1, B-2, and B-3. Toledo sells B-1 at the split-off point, with no further processing; it processes B-2 and B-3 further before they can be sold. B-2 is fused in Department 2, and B-3 is solidified in Department 3. Following is a summary of costs and other related data for the year ended June 30.

Department (1) Distilling (2) Fusing (3) Solidifying
Cost of A-123 \$ 288,000 0 0
Direct labor 72,000 \$ 135,000 \$ 195,000

Products B-1 B-2 B-3
Gallons sold 90,000 180,000 270,000
Gallons on hand at year-end 60,000 0 90,000
Sales \$ 90,000 \$ 288,000 \$ 425,250

Toledo had no beginning inventories on hand at July 1 and no A-123 on hand at the end of the year on June 30. All gallons on hand on June 30 were complete as to processing. Toledo uses the net realizable value method to allocate joint costs.

Required:
Compute the following:

(a) The net realizable value of B-1 for the year ended June 30.

(b) The joint costs for the year ended June 30 to be allocated.

(c) The cost of B-2 sold for the year ended June 30. (Do not round intermediate calculations. Round your final answer to the nearest dollar amount.)

(d)
The value of the ending inventory for B-1.(Do not round intermediate calculations. Round your final answer to the nearest dollar amount.)

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