1. Iota Pharmaceuticals

Scenario: Joint Cost Allocation and Product Profitability

Data: Iota Pharmaceuticals produces multiple pharmaceutical products simultaneously and allocates joint costs among them. For the year 2023, the company reported the following data for one of its product lines:

• Total Joint Costs: $1,000,000
• Units Produced: 100,000
• Sales Revenue: $2,000,000

Requirements: Allocate the joint costs to the product line using the physical units method and the net realizable value method. Analyze the impact of joint cost allocation on the reported profitability of the product line. Discuss the advantages and disadvantages of using different joint cost allocation methods. Evaluate the profitability of the product line based on the allocated costs and sales revenue. Recommend strategies for Iota Pharmaceuticals to optimize its joint cost allocation and improve the profitability of its product lines.