Question
MediaForum has three operating groups: Games, News, and Documentaries. In May, the company incurred $24,000,000 of joint cost for facilities and administration. May revenues and
MediaForum has three operating groups: Games, News, and Documentaries. In May, the company incurred $24,000,000 of joint cost for facilities and administration. May revenues and separate production costs of each group are as follows:
Games News Documentaries
Revenue: $34,040,000 $30,720,000 $189,320,000
Separate Costs: 31,040,000 16,320,000 110,720,000
a. What amount of joint cost is allocated to each operating group using the net realizable value approach?
b. Compute the profit for each operating area after the allocation.
c. What amount of joint cost is allocated to each operating group if the allocation is based on revenues?
d. Compute the profit for each operating group after the allocation. Show any losses as negative numbers.
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