Question

Required information [The following information applies to the questions displayed below.] The following information relates to a joint production process for three products, with a total joint production cost of $185,000. There are no separable processing costs for any of the three products. Sales Product Sales Value at Split-Off $203,500 92,500 74,000 $370,000 Units at Split-Off 540 1,080 1,980 3,600 What percentage of joint cost is allocated to each of the three products using the physical units method? Product Percent of Sales Units % 3

Answer 1

1)

PRODUCT	Number of units	% of Joint cost allocation
1	540	540/3600= .15 or 15%
2	1080	1080/3600 = .30 or 30%
3	1980	1980 /3600 = .55 or 55%
Total	3600	100%

#

% of joint cost allocation = Number of units of each product /Total number of units

2)

PRODUCT	Sales Value at split off	% of Joint cost allocation	Allocated joint cost
1	92500	92500/188700= 49.02%	185000*49.02%= 90687
2	92500	92500/188700= 49.02%	90687
3	3700	3700/188700= 1.96%	3626
Total	188700	100%	185000