Question

Harmon Inc. produces joint products L, M, and N from a joint process. Information concerning a batch produced in May at a joint cost of $120,000 was as follows:

		L		M		N		Total
Separable Processing cost	$	14,500	$	34,000	$	15,500	$	64,000
Units Produced		3,000		7,000		6,100		16,100
Sales Value (after addt’l processing)	$	78,000	$	72,500	$	34,000	$	184,500

The amount of joint costs allocated to product L using the net realizable value method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

• $63,237.

• $18,423.

• $49,796.

• $17,349.

• $38,340.

Answer 1

Answer:
Percentage of Allocation - Product L         =   (Sale value (-) Separable Processing cost ) / ( Total Sales Value (-) Total Separable Processing cost)         =   ( $ 78,000 (-) $ 14,500 ) / ( $ 184,500 (-) $ 64,000 )         =      $ 63,500 / $ 120,500	52.6971%
Amount of joint costs allocated to product L                        = Joint Cost x Percentage of Allocation                        =     $ 120,000 x 52.6971%	$ 63,237
Option (a) is Correct