Question

Choi Company manufactures two skin care lotions, Smooth Skin and Silken Skin, from a joint process. The joint costs incurred are $360,000 for a standard production run that generates 240,000 pints of Smooth Skin and 110,000 pints of Silken Skin. Smooth Skin sells for $3.10 per pint, while Silken Skin sells for $5.10 per pint. (Do not round intermediate calculations. Round final answers to nearest whole dollar amounts.) Required:1. Assuming that both products are sold at the split-off point, how much of the joint cost of each production run is allocated to Smooth Skin using the relative sales value method

Answer 1

The answer is "205,241"

Step-by-step explanation:

Its relative value operation:

Smooth skin Seedling Skin Total

A Unit sold
`240000 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 110000`

selling price per unit
`\$ \ 3.10 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \$ \ 5.10`

Sales value
`\$ \ 744,000 \ \ \ \ \ \ \ \ \ \ \ \$ \ 561,000 \ \ \ \ \ \ \ \ \ \ \ \$ \ 1,305,000`

Join its cost allocate
`(360000 * (sales\ value)/(1305000))`
`205,241 \ \ \ \ \ \ 154,759 \ \ \ \ \ \ 360,000`

Smooth Skin is assigned the combined costs within each development process by way of the relative cost process 205,241