Harmon Inc. produces joint products L, M, and N from a joint process. Informatio

Question

Harmon Inc. produces joint products L, M, and N from a joint process. Information concerning a batch produced in May at a joint cost of $75,000 was as follows:

The amount of joint costs allocated to product L using the net realizable value method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

$3,614.

$4,688.

$23,438.

$33,434.

$46,875.

L M N Total Separable Processing cost $10,000 $25,000 $2,000 $37,000 Units Produced 1,200 2,500 4,300 8,000 Sales Value (after addt’l processing) $60,000 $50,000 $7,000 $117,000

Explanation / Answer

Amount allocate to L as per netrealizabl value = 75,000 X %age allocate to L

= 75,000 x 62.50% = $ 46,875

So correct option is $ 46,875

Working

%age allocate to L = (Sales - Separable processing cost) / (total sales - Total seperable processing cost)

= (60,000- 10,000) / (117,000 -37,000) = 62.50%

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