Homework Answers
Answer:-
1. Joint costs to be allocated to Preon:-
Value of Preon = 10500*8 = $ 84000
Value of Paron = 14000*4 = $ 56000
Total Value of Chemical produced = 84000+56000 = $ 140000
Total Joint Costs = $ 8000
Joint costs to be allocated to Preon = 8000*84000/140000 = $ 4800.
2. Cost to be allocated to Product M :-
| L | M | |
| Quantities Produced | 225 | 180 |
| Market value at split off point | 8 | 15 |
| Value of Production | 1800 | 2700 |
Total value of production of L and M = 1800+2700=4500
Joint Costs = $ 760
Cost to be allocated to Product M = 760*2700/4500 = $ 456.
3. Joint cost to be allocated to street frontage lots:-
| Land | 1,810,000 |
| Street and utilities improvement | 1,410,000 |
| Total Joint Cost | 3,220,000 |
| Sale value of Golf Course Lots [100*96000] | 9600,000 |
| Sale value of Street Frontage Lots [125*66000] | 8250,000 |
| Total Sale Value of 225 Lots | 17,850,000 |
| Percentage of total sale value of Street Frontage Lots [8250000*100/17850000] = | 46.2% |
| Joint cost to be allocated to Street Frontage Lots [3220000*46.2%] | 1,487,640 |
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