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48. Tanner Corporation produced 5,490 units, consisting of three separate products, in a joint process for...

48.

Tanner Corporation produced 5,490 units, consisting of three separate products, in a joint process for the year. The market for these products was so unstable that it was not practical to estimate the selling price of the products. A cost of $499,000 was incurred in the joint process. Product X's production was 80% of product Y's while product Z's production was 125% of product Y's. What is the amount of the joint cost allocable to product X assuming Tanner uses the physical quantities method of allocation?

$134,275.

$130,885.

$158,754.

$161,077.

Solutions

Expert Solution

Let us assume the production of Product Y be A.
Hence the production of Product X = 0.80A and Production of Product Z = 1.25A
Total Units produced in Joint production is 5490 units.
Hence , A + 0.80A + 1.25A = 5490 units
3.05A = 5490 units
A i.e Product Y units = 5490 units / 3.05 = 1800 units
Product X units = 0.80 * 1800 units = 1440 units
Product Z units = 1.25 * 1800 units = 2250 units
Amount of the joint cost allocable to Product X assuming Tanner uses the physical quantities method of allocation
Joint cost allocable to Product X = [Total Joint cost / Total Production Units] * Production units of Product X
Joint cost allocable to Product X = [$499000 / 5490 units] * 1440 units = $1,30,885

ekkarill92 answered 2 years ago
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