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.
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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