Question

In: Accounting

Joint products A and B emerge from common processing that costs $240,000 and yields 2,000 units...

Joint products A and B emerge from common processing that costs $240,000 and yields 2,000 units of Product A and 1,000 units of Product B. Product A can be sold for $100 per unit. Product B can be sold for $50 per unit.

Question 5

How much of the joint cost will be assigned to Product B if joint costs are allocated on the basis of relative sales values?

Question 6

What is Product B’s profit if joint costs are allocated on the basis of relative sales values?

Question 7

How much of the joint cost will be assigned to Product B if joint costs are allocated on the basis of the number of units produced?

Question 8

What is Product B’s profit if joint costs are allocated on the basis of the number of units produced?

Solutions

Expert Solution

Answer 5:

Sale value of Product A = 2000 * $100 = $200,000

Sale value of Product B = 1000 * $50 = $50,000

Total sale value = 200000 + 50000 = $250,000

Based on relative sale value joint cost that will be assigned to Product B = 240000 * 50000/250000 = $48,000

Based on relative sale value joint cost that will be assigned to Product B = $48,000

Answer 6:

Sale value of Product B = 1000 * $50 = $50,000

Based on relative sale value joint cost that will be assigned to Product B = $48,000

Product B’s profit = 50000 - 48000 = $2,000

Product B’s profit if joint costs are allocated on the basis of relative sales values = $2,000

Answer 7:

Number of units produced of Product A = 2,000

Number of units produced of Product B = 1,000

Total number of units produced = 2000 + 1000 = 3,000

Based on number of units produced joint cost that will be assigned to Product B = 240000 * 1000/3000

= $80,000

Based on number of units produced joint cost that will be assigned to Product B = $80,000

Answer 8:

Sale value of Product B = 1000 * $50 = $50,000

Based on number of units produced joint cost that will be assigned to Product B = $80,000

Product B’s profit (loss) = 50000 - 80000 = -$30,000 or ($30,000)

Product B’s profit if joint costs are allocated based on number of units produced = -$30,000 or ($30,000)

ekkarill92 answered 1 year ago
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