Marin Products produces three products — DBB-1, DBB-2, and DBB-3 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. Key information about Marin's production, sales, and costs follows.
DBB-1 | DBB-2 | DBB-3 | Total | |||||||||
Units Sold | 14,000 | 23,000 | 30,000 | 67,000 | ||||||||
Price (after addt’l processing) | $ | 75 | $ | 60 | $ | 85 | ||||||
Separable Processing cost | $ | 483,000 | $ | 198,000 | $ | 287,000 | $ | 968,000 | ||||
Units Produced | 14,000 | 23,000 | 30,000 | 67,000 | ||||||||
Total Joint Cost | $ | 4,100,000 | ||||||||||
Sales Price at Split-off | $ | 15 | $ | 20 | $ | 40 | ||||||
The amount of joint costs allocated to product DBB-3 using the net realizable value method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):
Multiple Choice
$2,312,810.
$349,080.
$1,207,860.
$856,900.
$579,330.
Answer = $2312810
Calculated as
Calculation of Net realizable value | |||||
DBB-1 | DBB-2 | DBB-3 | Total | ||
a | Units Sold | 14,000 | 23,000 | 30,000 | 67,000 |
b | Price (after addt’l processing) | 75 | 60 | 85 | |
c=a*b | Total Sale | 1050000 | 1380000 | 2550000 | 4,980,000 |
d | Separable Processing cost | 483,000 | 198,000 | 287,000 | 968,000 |
e = c-d | Net Realizable value | 567,000 | 1,182,000 | 2,263,000 | 4,012,000 |
Total Joint Cost | 4100000 | ||||
Net Realizable value of DDB-3 | 2,263,000 | ||||
Total Realizable value of all products | 4,012,000 | ||||
Calculation of Ration of Joint cost allocated to DDB-3 | = | 2,263,000 | x | 100 | |
4,012,000 | |||||
= | 56.41 | % | |||
So Joint Cost allocated to DDB-3 | = | =56.41%*4100000 | |||
$ 2,312,810 |
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Marin Products produces three products — DBB-1, DBB-2, and DBB-3 from a joint process. Each product...
Marin Products produces three products — DBB-1, DBB-2, and DBB-3 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. Key information about Marin's production, sales, and costs follows. DBB-1 DBB-2 DBB-3 Total Units Sold 14,000 22,000 30,000 66,000 Price (after addt’l processing) $ 30 $ 15 $ 40 Separable Processing cost $...
Marin Products produces three products — DBB-1, DBB-2, and DBB-3 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. Key information about Marin's production, sales, and costs follows. DBB-1 DBB-2 DBB-3 Total Units Sold 17,000 26,000 38,000 81,000 Price (after addt’l processing) $ 25 $ 10 $ 35 Separable Processing cost $...
Marin Products produces three products — DBB-1, DBB-2, and DBB-3 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. Key information about Marin's production, sales, and costs follows. DBB-1 DBB-2 DBB-3 Total Units Sold 16,000 24,000 36,000 76,000 Price (after addt’l processing) $ 65 $ 50 $ 75 Separable Processing cost $...
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