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.
| 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. | ||||||||
Get Answers For Free
Most questions answered within 1 hours.