Red Sauce Canning Company processes tomatoes into catsup, tomato juice, and canned tomatoes. During November, they incurred joint processing costs of $420,000. Production and sales value information for November are as follows:
| Product | Cases | Selling Price/Case | Additional Costs/Case |
| Catsup | 100,000 | $10 | $2 |
| Tomato Juice | 150,000 | $8 | $1 |
| Canned Tomatoes | 250,000 | $12 | $3 |
The joint cost allocated to Canned Tomatoes (using the net realizable value method) is (round to the closest $)
Answer:
The joint cost allocated to Canned Tomatoes (using the net realizable value method) is = 230,487.80
Working notes for the above answer is as under
| Product | Expected | Separable | Net Realizable | Percentage |
| Sales Value | Costs | Value | ||
| Catsup | $1,000,000 | $200,000 | $800,000 | 19.50% |
| Juice | $1,200,000 | $150,000 | $1,050,000 | 25.60% |
| Canned | $3,000,000 | $750,000 | $2,250,000 | 54.90% |
| Totals | $4,100,000 | 100.00% |
Now we allocate joint cost of 420,00 among three product as Follow
| Product | Percentage | Joint Costs | Allocated |
| Catsup | 19.5% x | $420,000 = | 81951.21951 |
| Juice | 25.6% x | 420,000 = | 107560.9756 |
| Canned | 54.90% x | 420,000 = | 230487.8049 |
| 420000 |
The joint cost allocated to Canned Tomatoes (using the net realizable value method) is = 230,487.80
