Problem: Joint Costing - Roye Company
Roye Manufacturing Company buys zeon for $0.80 a litre. At the end of distilling in Department 1, zeonsplits off into three products: argon, xeon, and neon. Argon is sold at the split-off point, with no further processing; xeon and neon require further processing before they can be sold. Xeon is fused inDepartment 2, and neon is solidified in Department 3. The following is a summary of costs and other related data for the year ended December 31.
Department
Distilling (1) Fusing (2)Solidifying (3)
Cost of zeon $96,000Direct labor 24,000 $45,000 $65,000Manufacturing overhead 20,000 1,000 54,000
Products
Argon Xeon NeonLitres sold 15,000 30,000 45,000Litres on hand at year-end 10,000 - 15,000Sales in dollars $30,000 $96,000 $141,750 There were no beginning inventories on hand at January 1, and there was no zeon on hand at the end of the year on December 31. All litres on hand on December 31 were complete as to processing.
Required:
a. Assume that the Roye Manufacturing Company uses the net realizable value method for allocating joint costs, calculate the cost of goods sold and the cost of ending inventories of each of the three products.
b. Assume that the Roye Manufacturing Company uses the physical units method for allocating joint costs, calculate the cost of goods sold and the cost of ending inventories of each of the three products.