Question

Joint costs total $24,000 for a production process that yields two main products, A and B. If joint costs are allocated to the products on the basis of their respective $20,000 and $30,000 sales values, 2/3 of the joint costs (or $16,000) would be allocated to Product A.

a. True
b. False

Answer 1

given statement is false

Step-by-step explanation:

given

total joint cost = $24000

sale value of product A = $20,000

sale value of product B = $30,000

solution

we use sale value split method of joint cost allocation

here total sale value = $20000 + $30000 = $50000

we get first percentage sale value for both product that is

product A =
`(20000)/(50000)` = 40%

product B =
`(30000)/(50000)` = 60%

and

allocation cost for both product

product A = $24000 × 40% = $9000

product B = $24000 × 60% = $14000

total allocation cost = $24000

so here joint cost allocation to product A is $9600

so given statement is false