Question

Franklin Chemical Company makes three products, B7, K6, and X9, which are joint products from the same materials. In a standard batch of 357,000 pounds of raw materials, the company generates 70,000 pounds of B7, 168,000 pounds of K6, and 119,000 pounds of X9. A standard batch costs $2,856,000 to produce. The sales prices per pound are $10, $15, and $20 for B7, K6, and X9, respectively.

Required

1. Allocate the joint product cost among the three final products using weight as the allocation base.

2. Allocate the joint product cost among the three final products using market value as the allocation base.

Required A Required B Allocate the joint product cost among the three final products using weight as the allocation base. Allocation Rate x Weight of Base = Allocated Cost Product B7 K6 Total allocated cost

Answer 1

1
	Product	Alocation rate	Output (Pounds)	Allocated Cost
	B7	$8	70,000	$5,60,000
	K6	$8	1,68,000	$13,44,000
	X9	$8	1,19,000	$9,52,000
			3,57,000	$28,56,000
	Weight of Base (in pounds)		357000
	Total Cost		$28,56,000
	Cost per pound		$8
2
		B7	K6	X9	Total
	Pounds Produced	70,000	1,68,000	1,19,000	3,57,000
	Sales price per pound	$10	$15	$20
	Sales Revenue	$7,00,000	$25,20,000	$23,80,000	$56,00,000
	% of Total Revenue	12.50%	45.00%	42.50%	100%
	Joint Cost allocated	$3,57,000	$12,85,200	$12,13,800	$28,56,000