The Wang Company Conducts a Simple Chemical Process in Department

question 118

Essay

The Wang Company conducts a simple chemical process in Department #1, which produces three separate items: A, B, and C. A is processed further in Department #2. B is processed further in Department #3. Product C can be sold immediately. The following information relates to October:
Department #1's costs $540,000.
Department #2's costs $120,000.
Department #3's costs $300,000.
A: 25,000 pounds completed; 23,500 pounds sold for $12 per pound.
B: 75,000 pounds completed; 70,000 pounds sold for $7.50 per pound.
C: 50,000 pounds completed; 46,000 pounds sold for $5.00 per pound.
There were no beginning inventories.
Required:
a. Allocate the joint process costs to Products A, B, and C assuming the estimated net realizable value method is used.
b. Allocate the joint process costs to products A, B, and C assuming the physical quantities method is used.

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Definitions:

Independent Variables

Variables in an experiment or model that are manipulated or categorized to observe their effect on dependent variables.

Highly Correlated

Refers to a strong statistical relationship between two or more variables where changes in one variable are closely associated with changes in another.

Multicollinearity

A statistical phenomenon in which two or more predictor variables in a multiple regression model are highly correlated.

T-Tests

A statistical test used to compare the means of two groups and determine if they are significantly different from each other.