Question
morning all ,, yesterday i sent a question and i have three different answers and I dont know which one are correct, need your help
morning all ,,
yesterday i sent a question and i have three different answers and I dont know which one are correct, need your help please
the question is:
Crucible Company manufactures products A and B from a joint process, which also yields a by-product X. Crucible accounts for the revenues from its by-product sales as other income. Additional information follows:
A | B | X | Total | |
Units produced | 15,000 | 9,000 | 6,000 | 30,000 |
Joint costs | ? | ? | ? | $117,000 |
Sales value at split off | $125,000 | $100,000 | $25,000 | $250,000 |
Assuming that joint product costs are allocated using the net realizable value at split-off approach, what was the joint cost allocated to product B?
the answers are:
1.
A | B | X | Total | |
Sales Value at split off | $125,000 | $100,000 | $25,000 | $250,000 |
Joint Cost(Allocated as % of Sales Value) | $58,500 ($117,000*50%) | $46,800 ($117,000*40%) | $11,700 ($117,000*10%) | $117,000 |
Joint Cost allocated to the Product B is $46,800
2.
Answer: $ 52,000
As crucible accounts for its revenue from by product sales as other income, the amount of $ 25,000 should not be deducted from joint costs, in other words, the entire amount of $ 117,000 should be allocated to the two main products.
Therefore, the amount of joint costs to be allocated to product B = $ 100,000 / $ ( 125,000 + 100,000) x $ 117,000 = $ 52,000.
3.
Joint cost to be allocated
Total joint cost = $117000
Less: Other income = $25000
Joint cost to be allocated = $92000
Joint cost allocated to product B
= Total cost to allocated/Total sales value * Sales value of B
= 92000/(125000+100000) *100000
= $40889
thank you
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