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: | |
|
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 | |
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