Question

Soy Company produces two products, Soyburgers and Soy steaks. They are produced using a single process. In 2018, the joint costs of this process were $45,000. In addition, 17,000 pounds of soyburgers and 14,000 pounds of soy steaks were produced. Separable processing costs beyond the split-off point were: soyburgers, $7,350; soy steaks, $4,225. If the company chooses to process them further, they will incur additional costs of $0.45 and $0.31 per pound for soyburgers and soy steaks, respectively. Soyburgers sell for $2.35 per pound; Soy steaks sells for $6.21 per pound. Assume soyburgers are assigned a weight of 0.9 and soy steaks are assigned a weight of 1.5. At split-off, the soyburgers sell for $1.70 per pound and soy steaks sell for $5.25 per pound.

Required:

a. Allocate the joint costs using the physical units method.

b. Allocate the joint costs using the weighted average method.

c. Allocate the joint costs using the sales-value-at-split-off method.

d. Allocate the joint costs using the estimated net realizable value method

Answer 1

Joint cost : 45000
Req a:
Allocation of Joint cost:
Product		Physical	Proportion	Joint	Allocation of
		Units		Cost	Joint cost
Soya Burgers		17000	54.84%	45000	24678
Soy Streaks		14000	45.16%	45000	20322
		31000			45000
Req b:
Allocation of Joint cost:
Product		Physical	Weights	Weighted	Proportion	Joint	Allocation of
		Units		Units		Cost	Joint cost
Soya Burgers		17000	0.9	15300	42.15%	45000	18966.94
Soy Streaks		14000	1.5	21000	57.85%	45000	26033.06
		31000		36300			45000
Req c:
Allocation of Joint cost
Product		Physical	Sales value	Sales	Proportion	Joint	Allocation of
		Units	at Splitt of	Value		Cost	Joint cost
Soya Burgers		17000	1.7	28900	28.22%	45000	12700.2
Soy Streaks		14000	5.25	73500	71.78%	45000	32299.8
		31000		102400			45000
Req d:
Allocation of Joint cost
Product		Physical	Sales value	Sales	Further	Net realizable	Proportion	Joint	Allocation of
		Units	Further	Value	Proc. Cost	Value		Cost	Joint cost
Soya Burgers		17000	2.35	39950	7350	32600	28.27%	45000	12721.68
Soy Streaks		14000	6.21	86940	4225	82715	71.73%	45000	32278.32
		31000		126890	11575	115315			45000