Question

MediaForum has three operating groups: Games, News, and Documentaries. In May, the company incurred $43,200,000 of joint cost for facilities and administration.

May revenues and separate costs of each group are as follows:

Games News Documentaries

Revenue $61,272,000 $55,296,000 $340,776,000

Separate costs 55,872,000 29,376,000 199,296,000

a. What amount of joint cost is allocated to each operating group using the profit before joint cost allocation as the basis for allocation?

Note: Compute the profit for each operating area after the allocation.

Note: Round proportions to the nearest whole percentage and dollar amounts to the

nearest whole dollar.

Games Answer

News Answer

Documentary Answer

Total Answer

b. What amount of joint cost is allocated to each operating group if the allocation is based on revenue?

Note: Compute the profit for each operating group after the allocation.

Note: Round proportions to the nearest whole percentage and dollar amounts to the

nearest whole dollar.

Games Answer

News Answer

Documentary Answer

Total Answer

Answer 1

Part a
	Games	News	Documanteries	Total
Revenues	$                          61,272,000	$                                55,296,000	$                                  340,776,000	$                               457,344,000
Less:Separate Costs	$                          55,872,000	$                                29,376,000	$                                  199,296,000	$                               284,544,000
Profit before Joint allocation	$                            5,400,000	$                                25,920,000	$                                  141,480,000	$                               172,800,000
	Profit before Joint allocation	Percent of allocation	Joint Cost allocated
Games	$                            5,400,000	3%	$                                      1,296,000
News	$                          25,920,000	15%	$                                      6,480,000
Documanteries	$                        141,480,000	82%	$                                    35,424,000
Total	$                        172,800,000		$                                    43,200,000
Part b
	Revenues	Percent of allocation	Joint Cost allocated
Games	$                          61,272,000	13%	$                                      5,616,000
News	$                          55,296,000	12%	$                                      5,184,000
Documanteries	$                        340,776,000	75%	$                                    32,400,000
Total	$                        457,344,000		$                                    43,200,000