Subject: Cost Accounting and Control

Give the Correct Answer and Show Solution:

Case 3

Leigh Manufacturers produces three products from a common manufacturing process. The total joint cost of producing 2,000 pounds of Product A; 1,000 pounds of Product B; and 1,000 pounds of Product C is $7,500. Selling price per pound of the three products are $15 for Product A; $10 for Product B; and $5 for Product C. Joint cost is allocated using the sales value method.

Required:

• a. Compute the unit cost of Product A if all three products are main products.
• b. Compute the unit cost of Product A if Products A and B are main products and Product C is a by-product for which the cost reduction method is used.