Black Corporation processes xyrex into three outputs: Xy-1, Xy-2, and Xy-3. Xy-1
ID: 2461328 • Letter: B
Question
Black Corporation processes xyrex into three outputs: Xy-1, Xy-2, and Xy-3. Xy-1 accounts for 56 percent of the net realizable value at the split-off point, Xy-2 accounts for 30 percent, and Xy-3 accounts for the balance. The joint costs total $188,000. If Xy-3 is accounted for as a by-product, its $15,000 net realizable value at split-off is credited to the joint manufacturing costs using method 1 described in the text, which credits the by-product's net realizable value as a reduction in the joint costs.
Required: (a) What are the allocated joint costs for the three outputs
(1) If Xy-3 is accounted for as a joint product?
(2) If Xy-3 is accounted for as a by-product? (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)
Explanation / Answer
Answer 1. Allocation of cost to Joint product Product Amount Xy-1 - 188000 x 56% 105,280 Xy-2 - 188000 x 30% 56,400 Xy-3 - 188000 x 14% 26,320 Total Joint Cost 188,000 Answer 2. If Xy-3 Treated as By product Joint Cost to be Allocated = $188000 - $15000 (net relizable Value of Xy-3) = $173000 Allocation of cost to Joint product Product Amount Xy-1 - 173000 X 56/86 112,651 Xy-2 - 173000 X 30/86 60,349 Total Cost 173,000
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