31. Garage Specialty Corporation manufactures joint products P and Q. During a r

Question

31.  

Garage Specialty Corporation manufactures joint products P and Q. During a recent period, joint costs amounted to $105,000 in the production of 46,000 gallons of P and 81,000 gallons of Q. Garage can sell P and Q at split-off for $2.40 per gallon and $4.60 per gallon, respectively. Alternatively, both products can be processed beyond the split-off point, as follows:
   

The joint cost allocated to Q under the relative-sales-value method would be: (Do not round your intermediate calculations.)

Multiple Choice

$23,571.

$81,000.

$73,636.

$75,236.

None of these.

32. Garage Specialty Corporation manufactures joint products P and Q. During a recent period, joint costs amounted to $105,000 in the production of 46,000 gallons of P and 81,000 gallons of Q. Garage can sell P and Q at split-off for $2.40 per gallon and $4.60 per gallon, respectively. Alternatively, both products can be processed beyond the split-off point, as follows:
   

The joint cost allocated to P under the relative-sales-value method would be: (Do not round your intermediate calculations.)

Multiple Choice

$24,000.

$31,764.

$13,929.

$125,200.

None of these.

P Q   Separable processing costs $39,000 $59,000   Sales price (per gallon) if processed beyond split-off $3 $5

Explanation / Answer

31. The correct answer is option B $81000

According relative sales value method. Joint cost is allocated on the basis of total sales value of product.

Sales value of P = sales price * sales unit

46000*$2.40 = $110400

Sales value of Q= $81000*$4.60=$372600

Joint cost allocation to product Q= (joint cost * sales value of Q)÷ (Total sales value of P + total sales value of Q)

($105000*$372600)÷($110400 + 372600)= $81000

32. The correct option is A $24000

The same method can be followed as above discussed .

( Joint cost*sales value of product P)÷(Total sales value of product P + total sales value of product Q)

($105000*$110400)÷($110400+$372600)= $24000

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