Question

Marin Products produces three products — DBB-1, DBB-2, and DBB-3 from a joint process. Each product...

Marin Products produces three products — DBB-1, DBB-2, and DBB-3 from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Key information about Marin's production, sales, and costs follows.

DBB-1 DBB-2 DBB-3 Total
Units Sold 13,000 20,000 28,000 61,000
Price (after addt’l processing) $ 50 $ 35 $ 60
Separable Processing cost $ 296,000 $ 120,000 $ 177,000 $ 593,000
Units Produced 13,000 20,000 28,000 61,000
Total Joint Cost $ 3,800,000
Sales Price at Split-off $ 25 $ 35 $ 55

The amount of joint costs allocated to product DBB-1 using the net realizable value method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):

Multiple Choice

  • $904,400.

  • $321,890.

  • $552,140.

  • $809,780.

  • $2,343,460.

Homework Answers

Answer #1
Product Units Price after Sales after Less: Further Net realizable % of Total NRV Joint Allocated
Prcessing Prcessing cost Value cost Joint cost
DDB1 13000 50 650000 2,96,000 3,54,000 14.53% 38,00,000 552140
DDB2 20000 35 700000 1,20,000 5,80,000 23.80% 38,00,000 904390.6
DDB3 28000 60 1680000 1,77,000 15,03,000 61.67% 38,00,000 2343619
TOTAL 30,30,000 24,37,000 100.00% 38,00,000 3800000
Thus,
Joint cost allocated to DDB1 = $ 552,140.
Answer is $552,140.
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