lowa Soy Products (ISP) buys soybeans and processes them into other soy products. Each ton of soybeans that ISP purchases for $250 can be converted for an additional $180 into 650 lbs of soy meal and 100 gallons of soy oil. A pound of soy meal can be sold at splitoff for $1.36 and soy oil can be sold in bulk for $4.5 per gallon. ISP can process the 650 pounds of soy meal into 750 pounds of soy cookies at an additional cost of $330. Each pound of soy cookies can be sold for $2.36 per pound. The 100 gallons of soy oil can be packaged at a cost of $230 and made into 400 quarts of Soyola. Each quart of Soyola can be sold for $1.25. Read the requirements.
Requirements 1. Allocate the joint cost to the cookies and the Soyola using the following: a. Sales value at splitoff method b. NRV method 2. Should ISP have processed each of the products further? What effect does the allocation method have on this decision?