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:

Required:

Assuming that total joint costs of $399,600 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.)

If Processed Further Product Units Produced Sales Value at Split-Off Additional Costs Sales Values W-10 51,800 $ 308,000 $ 33,200 $ 337,000 W-20 37,000 265,000 26,500 308,000 W-30 29,600 179,000 17,900 222,000 W-40 29,600 136,000 11,100 148,000 148,000 $ 888,000 $ 88,700 $ 1,015,000

Explanation / Answer

Answer:- Total Joint cost =$399600

Allocation of Joint cost using the sales value at split off (Net realizable value method):-

=Sales value at Split-Off – Additional costs

W-10 =$308000- $33200= $274800

W-20=$265000-$26500=$238500

W-30=$179000-$17900=$161100

W-40=$136000-$11100=$124900

Total sales value =$274800+$238500+$161100+$124900 =$799300

Joint cost allocated to W-10 =($274800/$799300)*$399600=$137383

Joint cost allocated to W-20 =($238500/$799300)*$399600=$119235

Joint cost allocated to W-30 =($161100/$799300)*$399600=$80540

Joint cost allocated to W-40 =($124900/$799300)*$399600=$62442

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