Denise Company manufactures three products from a joint process. Joint costs for the year amounted to $250,000. The following data was available: Product Units Produced Sales Value at Splitminusoff X 5,000 $70,000 Y 3,000 $30,000 Z 2,000 $100,000 Assume the relativeminussalesminusvalue method of allocating joint costs is used. What amount of joint costs is allocated to Product X?

Question

10-03-2020
Business

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Denise Company manufactures three products from a joint process. Joint costs for the year amounted to $250,000. The following data was available: Product Units Produced Sales Value at Splitminusoff X 5,000 $70,000 Y 3,000 $30,000 Z 2,000 $100,000 Assume the relativeminussalesminusvalue method of allocating joint costs is used. What amount of joint costs is allocated to Product X?

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TomShelby TomShelby · Answer 1 · 2020-03-11T01:54:05+01:00

Answer:

Product X is allocated with 87,500 dollar of the joint cost.

Explanation:

We allocate the values considering the weight of their sales value:

Joint cost: 250,000

We add up the sales values and then calcualte how much each product contributes to that.

Then we multiply that weight or percentage of sales revenue by the joint cost to get the allocated on each product.

[tex]\left[\begin{array}{cccc}$Product&$Sales&$Weight&$Cost\\X&70000&0.35&87500\\Y&30000&0.15&37500\\V&100000&0.5&125000\\Total&200000&1&250000\\\end{array}\right][/tex]