Deming& Sons manufactures four grades of lubricant, W-10, W-20, W-30, and W-40,

Question

Deming& Sons manufactures four grades of lubricant, W-10, W-20, W-30, and W-40, from a joint process. Additional information follows: If Processed Further Units Sales Value at Split-Off $ 408,000 Product Produced W-10 W-20 W-30 W-40 Additional Costs Sales Values 68,600 49,000 39,200 S 44,100 35,100 23,700 14,700 S117,600 $ 447,000 408,000 294,000 196,000 $1,345,000 351,000 237,000 196,000 $1.176,000 Required Assuming that total joint costs of $446,880 were allocated using the sales value at split-off (net realizable value method). what joint costs were allocated to each product? (Do not round intermediate calculations.) nt Costs Allocated Product W-10 W-20 W-30 W-40 Off

Explanation / Answer

Allocation of joint cost of $446880 by Net Realizable value method (NRV)

Bold Lines in above table is the answers for the sheet given in quesion.

Note:

A Alternative method can be as below when we assume the given sales value at splits off point as net realisable value at splits off when the allocation of joit cost of 446880 will be as follows.

So answer provided on basis of NRV is the right answer for this problem but in a situation one can also allocate costs using seceond method assuming given sales value at splits off point as net realisable value at split off so both possible answers presented for better understanding but answer 1 is most suitable answer.

Product / Description W10 W20 W30 W40 TOTAL Sales Value (Final) (A) 447000 408000 294000 196000 1345000 Separatable Cost (After split off costs) (B) 44100 35100 23700 14700 117600 NRV (A-B) 402900 372900 270300 181300 1227400 (%) on NRV (Product NRV / Total NRV) x 100 32.83% 30.38% 22.02% 14.77% 100% Allocation of joint cost of 446880 on percent basis 146711 135762 98403 66004 446880

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