Question

The following information relates to a joint production process for three products, with a total joint production cost of $135,000. There are no separable processing costs for any of the three products. Product Sales Value at Sales Split-Off $189,000 54,000 27,000 Units at Split-Off 260 780 1,560 2,600 3 $ 270,000 Assume that the total sales value at the split-off point for product 1 is $81,000 instead of $189,000 and the sales value of product 3 is $2,700 instead of $27,000. Assume also that, because of its relatively low sales value, the firm treats product 3 as a by-product and uses the asset recognition method for accounting for by-products. What amount of joint cost would be allocated to the products using the sales value at split-off method? Product Allocated Joint Cost

Answer 1

Product	Allocated Joint cost
1	$79,412
2	$52,941
3	$2,647
Working
Product	Sale value at split off	Percent of Sales value	Joint cost	Allocated Joint cost
1	$81,000	58.82%	$135,000	$79,412
2	$54,000	39.22%	$135,000	$52,941
3	$2,700	1.96%	$135,000	$2,647
	$137,700			$135,000