Question

ABC Company produces three products in a joint production process. At the split-off point, all three...

ABC Company produces three products in a joint production process. At the
split-off point, all three products are produced further and then sold.
Information about these products for 2019, the most recent year, appears
below:

                                  Product A      Product B      Product C
Units produced ...............    15,000         25,000         10,000
Selling price ................    $50 per unit   $40 per unit   $75 per unit
Additional processing costs ..    $15 per unit   $16 per unit   $37.50 per unit

Joint costs for 2019 totaled $150,000.

During 2019, ABC Company sold 12,000 units of Product A; 11,000 units of
Product B were sold; and 9,000 units of Product C were sold. Assume there
were no beginning inventories of any type in 2019.

ABC Company employs the physical units method to allocate joint costs to
products.

Calculate the amount of cost of goods sold that ABC Company would report
for 2019.

Homework Answers

Answer #1

Solution:

Allocation of Joint Cost - Physical measure method
Particulars Product A Product B Product C Total
Output at split off point 15000 25000 10000 50000
Weight 0.3 0.5 0.2
Allocation of Joint Cost $45,000.00 $75,000.00 $30,000.00 $150,000.00
Joint cost per unit $3.00 $3.00 $3.00
Computation of unit cost and Cost of goods sold
Particulars Product A Product B Product C Total
Joint cost per unit $3.00 $3.00 $3.00
Additional processing cost per unit $15.00 $16.00 $37.50
Unit cost $18.00 $19.00 $40.50
Nos of units sold 12000 11000 9000
Cost of goods sold $216,000.00 $209,000.00 $364,500.00 $789,500.00
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