A chemical company incurs joint costs of $500,000 producing three products: Product A sells for $300,000, Product B sells for $200,000, Product C sells for $100,000.

• Requirements:
  • Allocate joint costs using the physical units method.
  • Allocate joint costs using the sales value method.
  • Prepare a joint cost allocation report for each product.
  • Discuss the rationale behind different joint cost allocation methods.
  • Analyze the impact of joint cost allocation on product profitability.