Question

The Berkel Corporation manufactures Widgets, Gizmos, and Turnbols from a joint process. June production is 5,000 widgets; 8,750 gizmos; and 10,000 turnbols. Respective per unit selling prices at splitoff are $75, $50, and $25. Joint costs up to the splitoff point are $187,500. If joint costs are allocated based upon the sales value at splitoff, what amount of joint costs will be allocated to the widgets

Answer 1

To allocate joint costs based on sales value at splitoff, we calculate the total sales value of the products, determine the proportion of each product's sales value to the total, and allocate joint costs accordingly.

Step-by-step explanation:

To allocate joint costs based on sales value at splitoff, we need to calculate the total sales value of the three products. The total sales value is calculated by multiplying the quantity of each product by its respective selling price at splitoff and then summing the values.

The total sales value for widgets is 5,000 widgets x $75 = $375,000

Next, we calculate the proportion of the total sales value that widgets represent. The proportion is calculated by dividing the sales value of widgets by the sum of the sales value of all three products.

The proportion for widgets is ($375,000 / ($375,000 + $437,500 + $250,000)) = 0.4167

Finally, we allocate the joint costs based on the proportion. The joint costs allocated to widgets is the proportion multiplied by the total joint costs.

The joint costs allocated to widgets is 0.4167 x $187,500 = $78,125

Answer 2

Allocated join cost = $66,176.47

Step-by-step explanation:

The joint cost is allocated using sales. This is done by using the proportion of sales of the total which is attributed to the sales value of widget

Total sales value of the three products=

(75 × 5,000) + ($50× 8,750) + ( $25× 10,000)= 1,062,500

Joint cost = $187,500.

Joint costs allocated to Widget

= (75 × 5,000)/1,062,500 × $187,500. = 66,176.47

Allocated join cost =$66,176.47