es two main products and a by-product out of a joint process. The ratio of outpu

Question

es two main products and a by-product out of a joint process. The ratio of output quantities to input quantities of Upton Company produc direct material used in the joint process remains consistent from month to month. Upton has employed the physical-volume method to allocate joint production costs to the two main products. The net realizable value of the by-product is used to reduce the joint production costs before the joint costs are ollocated to the main products. Date regarding Upton's operations for the current month are presented in the chart below. During the month, Upton incurred joint production costs of $4,019,640. The main products are not marketable at the split-off point and, thus, have to be processed further Main Product Second Main Product By-Product 76.200 Monthly output in pounds Selling Price per pound Separable process costs 11,600 28 $ 669,600 77000 12 s 778,800 The amount of joint production cost that Upton would allocate to the Second Main Product by using the physical quantities method to allocate joint production costs would be O $2.465.268 o $2,071.800. O $2.131,800 O $2.371.800 ies ona re c

Explanation / Answer

Calculation of amount of joint production cost allocated to Second Main Product Net Cost to be allocated among product = Joint production costs - Net realizable value of bye product Net Cost to be allocated among products = $40,19,640 - (76200 units * $2) = $38,67,240 Total monthly output in pounds = 111600 + 177000 = 288600 Net Cost allocated to Second Main Product by physical quantities Method = $38,67,240 * (177000 / 288600) = $23,71,800 The answer is $23,71,800

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