QUESTION 1 :

(A) Waterloo company manufactures four joint products which have a manufacturing cost of $120,000 at the split-off point. Data pertaining to these products are as follows:

Product	Final market value per unit	Processing cost after split-off	Units produced and sold
A	$.50	$2,000	20,000
B	5.00	10,000	15,000
C	4.50	10,000	10,000
D	8.00	28,000	15,000
Total			60,000

Required: Allocate the joint costs under each of the following methods:

Estimated Net Realisable Value method (NRV); and (12)

Constant gross margin percentage NRV method. (4+6+4+4=18)

Solution:

Estimated NRV method

Answer:

Products
A
B
C
D
Total

Constant gross margin percentage NRV method. (4+6+4+4=18)

Show the calculation of Gross Margin Percentage below :

Show the allocation of Joint costs:

Answer:

why are joint costs irrelevant in the sell or process further decision?

Market value at split-off point method is considered a better method of joint cost allocation over physical unit method. Do you agree? Explain.