Question

TB MC Qu. 09-81 (Algo) Wren Pork Company uses...

Wren Pork Company uses the value basis method of allocating joint costs in its production of pork products. Relevant information for the current period
follows:
Product
Loin chops
Ground
Ribs
Bacon
Total
Sales Value
$13,300
17,500
16,800
22,400
$70,000
The total joint cost for the current period was $48,000. How much of this cost should Wren Pork allocate to Loin chops?

Answer 1

To allocate joint costs using the value basis method, we need to determine the total sales value of all products and the percentage of the total sales value represented by each product. We can then allocate the joint costs to each product based on its percentage of the total sales value.

Total sales value for all products = $70,000

Percentage of total sales value for Loin chops = ($13,300 / $70,000) x 100% = 19%

Therefore, Wren Pork should allocate 19% of the total joint cost of $48,000 to Loin chops:

19% x $48,000 = $9,120

So, Wren Pork should allocate $9,120 of the joint cost to Loin chops.

Step-by-step explanation: