Question

The Berkel Corporation manufactures​ Widgets, Gizmos, and Turnbols from a joint process. June production is 5 comma 000 ​widgets; 8 comma 750 ​gizmos; and 10 comma 250 turnbols. Respective per unit selling prices at splitminusoff are $ 85​, $ 55​, and $ 20. Joint costs up to the splitminusoff point are $ 188 comma 500. What amount of joint costs will be allocated to the​ Gizmos? (Do not round any intermediary​ calculations.)

Answer 1

Cost allocated to Gizmos

Using Physical Measurement Method is $68,724

Using Relative Sales Value Method is $81,634

Step-by-step explanation:

Widgets Gizmos Turnbols Total

June production 5,000 8,750 10,250 24,000

Selling Price $85​ $55 $20 $160

Sales Value 425,000 481,250 205,000 1,111,250

Joint costs = $188,500

Physical Measurement Method

Cost allocated to Gizmos =( Quantity of the Product / Quantity of Total Production ) x Total Joint Costs

Cost allocated to Gizmos = ( 8,750 / 24,000 ) x $188,500

Cost allocated to Gizmos = $68,724

Relative Sales Value Method

Cost allocated to Gizmos = ( Sale Value of the Product / Sales Value of Total Production ) x Total Joint Costs

Cost allocated to Gizmos = ( 481,250 / 1,111,250 ) x 188,500 = $81,634