1.

Prepare a schedule showing allocation of the $120,000 joint cost between Alpha and gamma using the relative sales value approach.
The net realizable of Beta should be treated as an addition to the sales value of Alpha

Departement 4

A $23660 Alpha : Price $5

46200 Pounds (70%)
Departement 2

Departement 1 D $38000 C
66000 Pounds (60%)
DM Rho $120000 Selling Expense $8100 Beta : Price $1.20
B
11000 Pounds 19800 Pounds (30%)

$165000 Gamma : Price $12

E
44000 Pounds (40%) Waste = 10% of good output 40000 Pounds (30%)
= 0.1 x 44000
Departement 3
= 4000
 1.
Relative Sales Value at A $207,340 $5 x 46,200 - $23,660
Relative Sales Value at B 15,660 $1.20 x 19,800 - $8,100
Relative Sales Value at C $223,000
Less: Department # 2 Separable Costs (38,000)
Relative Sales Value at D $185,000
Relative Sales Value at E 315,000 $12 x 40,000 - $165,000
Total Sales Value at 1st Split-off Point $500,000

Allocation of $120,000 joint Mfg. Costs:

$185,000 / $500,000 x
To Alpha Path $44,400 $120,000
$315,000 / $500,000 x
To Gamma Path $75,600 $120,000

2.

Sales of Alpha (80%) $184,800 0.8 x $5 x 46,200

Less:
Cost of Goods Sold :
Separable mfg. costs: Depart. # 4 $23,660
Separable mfg. costs: Depart. # 2 $38,000
Sales of Beta (15,660) $1.20 X 19,800 - $8,100
Net Mfg. costs $46,000
Less ending inventory (20%) (9,200)
Cost of Goods Sold (80%) $36,800
$184,800 -
Gross Margin from Sales of 80% of Alpha $148,000 $36,800