Bonanza Co. manufactures products X and Y from a joint process that also yields a by-product,...

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Bonanza Co. manufactures products X and Y from a joint process that also yields a by-product,...

Bonanza Co. manufactures products X and Y from a joint process that also yields a by-product, Z. Revenue from sales of Z is treated as a reduction of joint costs. Additional information is as follows:

	PRODUCTS
	X		Y		Z		TOTAL
Units produced		21,000		21,000		10,500		52,500
Joint costs		?		?		?	$	267,000
Sales value at split-off	$	315,000	$	157,500	$	10,500	$	483,000

Joint costs were allocated using the net realizable value method at the split-off point. The joint costs allocated to product X were

Multiple Choice

$78,750.
$103,800.
$157,500.
$171,000.

business accounting

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Answer 1

Answer #1

Joint costs to be allocated	256500	=267000-10500
Multiply by Percentage of Product X sales value to Total Sales value	66.67%	=315000/(315000+157500)
Joint costs allocated to product X	171000

Option D $171,000 is correct

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Answer 2

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