Question

Joint products A and B emerge from common processing that costs $116,000 and yields 4,000 units of Product A and 2,800 units of Product B. Product A can be sold for $280 per unit. Product B can be sold for $100 per unit. How much of the joint cost will be assigned to Product A if joint costs are allocated on the basis of relative sales values

Answer 1

Apportioned joint cost to A=$92,800

Step-by-step explanation:

Joint costs are the costs incurred up until the split-off where two or more products result from the same production process. These common costs need to be apportioned among the joint products using any of the following basis:

1. physical units
2. Relative sales value basis.

The relative value basis apportions joint costs using the proportion of product individual sales value to the the total sales value.

Total sales value = (280×4,000) + (100×2,800) =1400000

Apportioned joint cost to A =(1,120,000/1,400,000)× 116,000=92800

Apportioned joint cost to A=$92,800