Q 3 Abdelaziz Company produces 3 types of products. During the year the joint costs of...

Q 3 Abdelaziz Company produces 3 types of products. During the year the joint costs of processing the 3 products were $350,000.

Production and sales value information were as follows:

Sales Value

Product Units produced at Split-Off Separable Costs Selling Price

Product A 400,000 $10 per unit $6.00 per unit $40 per unit

Product B 300,000 $9 per unit $4.00 per unit $28per unit

Product C 500,000 $6 per unit $3.00 per unit $18 per unit

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

b. Allocate the joint costs using the net realizable value method.

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

Expert Solution

A. Allocation of Joint Cost using the Physical output Method
Product	Unit Produced	Allocation of Joint Cost	Working
Product A	400000	$116,667	($350000/1200000*400000)
Product B	300000	$87,500	($350000/1200000*300000)
Product C	500000	$145,833	($350000/1200000*500000)
Total	1200000	$350,000

b. Allocation of Joint Cost using the Net Realizable Value

Product	Unit Produced	Sale Value at Split off Point/Unit	Seperable Cost/Unit	NRV/Unit	NRV Value at Split off Point	Allocation of Joint Cost	Working
Product A	400000	$10.00	$6.00	$4.00	$1,600,000	$121,739	($350000/4600000*1600000)
Product B	300000	$9.00	$4.00	$5.00	$1,500,000	$114,130	($350000/4600000*1500000)
Product C	500000	$6.00	$3.00	$3.00	$1,500,000	$114,130	($350000/4600000*1500000)
Total	1200000				$4,600,000	$350,000

Allocation of Joint Cost using Split off Point
Product	Unit Produced	Sale Value at Split off Point/Unit	Sale Value at Split off Point	Allocation of Joint Cost	Working
Product A	400000	$10.00	$4,000,000	$144,330	($350000/9700000*4000000)
Product B	300000	$9.00	$2,700,000	$97,423	($350000/9700000*2700000)
Product C	500000	$6.00	$3,000,000	$108,247	($350000/9700000*3000000)
Total	1200000		$9,700,000	$350,000

ekkarill92 answered 1 year ago

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