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Good Hope Pharmaceutical Company purchases raw material that is processed to yield three chemicals namely; Zetamol, Paramol, and Bethamol. In January 2009, the company purchased 10000 kilograms of the raw material at a cost of $ 2500000 and incurred joint conversion cost of $700000. Sales and production information for the month of January were as follows;
Kilograms produced
Price at spilt-off $
Further processing
cost per Kg $
Eventual selling price $
Zetamol
2,000
550
-
Paramol
3,000
400
Bethamol
5,000
300
50
600
Zetamol and paramol are sold to other pharmaceutical companies at the split off point. Bethamol can be sold at the split off point or processed further and packaged for sales as an asthma medication.
Required
Allocate the joint cost to the three products using:
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