Q 3 Abdelaziz Company produces 3 types of products. During the year the joint co

Question

Q 3 Abdelaziz Company produces 3 types of products. During the year the joint costs of processing the 3 products were $350,000.

             Production and sales value information were as follows:

                                             Sales Value

Product         Units produced   at Split-Off          Separable Costs                      Selling Price

Product A            400,000       $10 per unit           $6.00 per unit $40 per unit

Product B            300,000        $9 per unit           $4.00 per unit $28per unit

Product C            500,000        $6 per unit           $3.00 per unit $18 per unit

a.   Allocate the joint costs using the physical output method.

b.   Allocate the joint costs using the net realizable value method.

c.    Allocate the joint costs using sales value at split-off point method.

Explanation / Answer

A. Allocation of Joint Cost using the Physical output Method Product Unit Produced Allocation of Joint Cost Working Product A 400000 $116,667 ($350000/1200000*400000) Product B 300000 $87,500 ($350000/1200000*300000) Product C 500000 $145,833 ($350000/1200000*500000) Total 1200000 $350,000 b. Allocation of Joint Cost using the Net Realizable Value Product Unit Produced Sale Value at Split off Point/Unit Seperable Cost/Unit NRV/Unit NRV Value at Split off Point Allocation of Joint Cost Working Product A 400000 $10.00 $6.00 $4.00 $1,600,000 $121,739 ($350000/4600000*1600000) Product B 300000 $9.00 $4.00 $5.00 $1,500,000 $114,130 ($350000/4600000*1500000) Product C 500000 $6.00 $3.00 $3.00 $1,500,000 $114,130 ($350000/4600000*1500000) Total 1200000 $4,600,000 $350,000 Allocation of Joint Cost using Split off Point Product Unit Produced Sale Value at Split off Point/Unit Sale Value at Split off Point Allocation of Joint Cost Working Product A 400000 $10.00 $4,000,000 $144,330 ($350000/9700000*4000000) Product B 300000 $9.00 $2,700,000 $97,423 ($350000/9700000*2700000) Product C 500000 $6.00 $3,000,000 $108,247 ($350000/9700000*3000000) Total 1200000 $9,700,000 $350,000

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.