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Joint cost allocation; sell or process further In a joint process, Wear Art produces precut fabrics for three products: dresses, jackets, and blouses. Joint cost
Joint cost allocation; sell or process further In a joint process, Wear Art produces precut fabrics for three products: dresses, jackets, and blouses. Joint cost is allocated on the basis of relative sales value at split-off. The company can choose to process each of the products further rather than sell the fabric at split-off. Information related to these products follows. Dresses Jackets Blouses Total Number of units produced 30,000 48,000 18,000 96,000 Joint cost allocated ? $414,000 ? $1,080,000 Sales values at split-off point ? $690,000 $240,000 $1,800,000 Additional costs of processing further $78,000 $60,000 $234,000 $372,000 Sales values after all processing $900,000 $804,000 $630,000 $2,334,000 a. What amount of joint cost should be allocated to dresses and blouses? Dresses Blouses Allocated joint costs $ 0 $ 0 b. What is the sales value at the split-off point for dresses? $ 0 C. Should any of the products be processed beyond the split-off point? Show computations. Dresses Jackets Blouses Net benefit (cost) of further processing 5 0 $ 0 $ Process Further? dresses jackets blouses d. If 36,000 jackets are processed further and sold at the regular selling price, what is the gross profit on the sale? $ 0
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