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Joint Cost Allocation—Physical Units Method Blake’s Blacksmith Co. produces two types of shotguns, a 12-gauge and...

Joint Cost Allocation—Physical Units Method

Blake’s Blacksmith Co. produces two types of shotguns, a 12-gauge and 20-gauge. The shotguns are made through a joint production process that ultimately produces 35 12-gauge shotguns and 15 20-gauge shotguns and costs a total of $3,900 per batch. After the split-off point, each type of shotgun goes through an additional crafting process before it is sold. The additional production process of the 12-gauge shotgun costs $35 per gun, after which it is sold for $170 per gun. The additional production process of the 20-gauge shotgun costs $24 per gun, after which it is sold for $154 per gun.

Determine the amount of joint production costs allocated to each type of shotgun using the physical units method.

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Answer #1
Joint cost allocation
Physical units Joint cost allocated
12-gauge 35 $2,730 ($3,900*35/50)
20-gauge 15 1,170 ($3,900*15/50)
Total 50 $3,900
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