Question

Data pertaining to a company's joint production for the current period follows

Quantities produced 310 lbs. 260 lbs
Market value at split-off point . $10.2/lb. $20.4/lb
Compute the cost to be allocated to Product L for this period's $792 of joint costs if the value basis is used. (Do not round intermediate calculations.)
a. $295.81.
b. $49619.
c. $39600.
d. $2,926.00.
e. $962.19.

Answer 1

Answer: a. $295.81.

Step-by-step explanation:

Using the value basis would mean that the product's share of the total market value will be used to determine it's share of the cost.

Total Market Value = Product L Market Value + Product M Market Value

= (310 lbs * 10.2) + ( 260 lbs * 20.4)

= ‭3,162‬ + ‭5,304‬

= $‭8,466‬

Product L's share of total market value

= 3,162/8,466

Product L's share of the $792 based on share of total market value

= (3,162/8,466) * 792

= $295.8072

= $295.81