Question

Garrison Co. produces three products — X, Y, and Z — from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Last year all three products were processed beyond split-off. Joint production costs for the year were $120,000. Sales values and costs needed to evaluate Garrison's production policy follow. Units Sales Value at If Processed Further Product Produced Split Off Sales Value Additional Costs x 6,000 $ 40,000 $ 80,000 $ 1,200 y 3,000 15,000 40,000 3,000 z 1,000 16,000 30,000 1,500 The amount of joint costs allocated to product X using the net realizable value method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

Answer 1

The amount of joint costs allocated to product X using the net realizable value method is $71,874.

Step-by-step explanation:

The amount of joint costs allocated to product X using the net realizable value method can be calculated as follows:

Calculate the net realizable value (NRV) for each product by subtracting the additional costs from the sales value if processed further.Calculate the total NRV for all three products (X, Y, and Z).Allocate the joint costs to each product based on their proportion of the total NRV.

For product X, the NRV is $80,000 - $1,200 = $78,800. The total NRV for all three products is $78,800 + $39,000 + $14,500 = $132,300.

Therefore, the amount of joint costs allocated to product X is ($78,800 / $132,300) * $120,000 = $71,874.44 (rounded to the nearest whole dollar).

Answer 2

X Y Z Total

Units Sold 6,000 3,000 1,000 10,000

Price (after addt’l processing)

Separable Processing cost $1,200 $3,000 $1,500 $5,700

Units Produced 6,000 3,000 1,000 10,000

Total Joint Cost $120,000

Sales Price at Split-off

Sales Value

(after addt’l processing) $80,000 $40,000 $30,000 $150,000

Sales Value at Split Off $40,000 $15,000 $16,000 $71,000

Physical Measure Method

XYZTotal

Units of Production 6,000 3,000 1,000 10,000

Percent of Total 60,0000% 30,0000% 10,0000% 100,0000%

Joint Cost Allocation $72,000 $36,000 $12,000 $120,000