Question
[The following information applies to the questions displayed below.] The following information relates to a joint production process for three products, with a total joint
[The following information applies to the questions displayed below.]
The following information relates to a joint production process for three products, with a total joint production cost of $125,000. There are no separable processing costs for any of the three products.
Product | Sales Value at Split-Off | Units at Split-Off | ||||
1 | $ | 150,000 | 360 | |||
2 | 62,500 | 840 | ||||
3 | 37,500 | 1,200 | ||||
$ | 250,000 | 2,400 | ||||
Assume that the total sales value at the split-off point for product 1 is $62,500 instead of $150,000 and the sales value of product 3 is $2,500 instead of $37,500. Assume also that, because of its relatively low sales value, the firm treats product 3 as a by-product and uses the asset recognition method for accounting for by-products. What amount of joint cost would be allocated to the products using the sales value at split-off method?
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