JOINT/BY-PRODUCT/COMMON COSTS Illustration #1 (Revised): XYZ Corporation uses a process in which the following products emerge at the split-off point: Products Units Produced Sales Value at Split-off Point x Y 220 400 $6.00 per unit $3.00 per unit The total joint costs amount to $2,030.00. Product X is processed further by incurring an additional cost of $350.00. During this process, 10% of good output is lost resulting in the production of two products in proportions and sales values, as shown below: Products Proportion of Units Produced Sales Value 80% X1 X2 $10.00 per unit $1.00 per unit 20% X2 is a by-product, which requires $0.25 per unit of expense before it can be sold. XYZ's accounting for by-products mandates that its net realizable value be deducted from the total cost of production. Required: A. Allocate joint costs to the products using the following methods: 1. Physical measure. Also determine gross margin, gross margin percentage as well as cost per unit of products X1 and Y under this method. 2. Sales value at split-off point 3. Net realizable value, assuming that product X is not saleable at the split-off point. 4. Constant gross margin B. Assuming that (1) product X was saleable at the split-off point and that (2) you are the newly-appointed manager in-charge of the product and have been asked to assess whether your predecessor's decision to process further was right. Would you use any one of the appropriate joint cost allocation methods in your assessment? If yes, indicate which one and why? If not, why not? What would be your assessment