33. Christiansen Corporation manufactures joint products W and X. During a recen
ID: 2535665 • Letter: 3
Question
33. Christiansen Corporation manufactures joint products W and X. During a recent period, joint costs amounted to $350,000 in the production of 20,000 gallons of W and 60,000 gallons of X. Both products will be processed beyond the split-off point, giving rise to the following data:
The joint cost allocated to W under the net-realizable-value method would be: (Do not round your intermediate calculations.)
Multiple Choice
$87,500.
$95,000.
$131,250.
$147,000.
None of these.
34.
Christiansen Corporation manufactures joint products W and X. During a recent period, joint costs amounted to $350,000 in the production of 20,000 gallons of W and 60,000 gallons of X. Both products will be processed beyond the split-off point, giving rise to the following data:
rev: 10_29_2012
The joint cost allocated to X under the net-realizable-value method would be: (Do not round your intermediate calculations.)
Multiple Choice
$203,000.
$215,000.
$236,250.
$183,000.
None of these.
W X Separable processing costs $45,000 $165,000 Sales price (per gallon) if processed beyond split-of $18 $10Explanation / Answer
Christiansen Corporation
The Answer is $147,000
Determination of joint cost allocated to W under the net realizable value method would be:
The net realizable value of W = 20,000 gallons x $18 = $360,000
Less: separable costs = $45,000
net realizable value of W = 360,000 - 45,000 = $315,000
The net realizable value of X = 60,000 gallons x $10 = $600,000
Less: separable costs = $165,000
net realizable value of X = 600,000 - 165,000 = $435,000
Total net realizable value of two products = $315,000 + $435,000 = $750,000
Proportion of W = 315,000/750,000 = 42%
Proportion of X = 435,000/750,000 = 58%
Hence, Joint cost allocated to W based on net realizable value = $147,000
Hence, Joint cost allocated to X= 350,000 x 58% = $203,000
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