Oak Products produces two joint products (A and B). Prior to the split-off point, the company incurs costs of $5,840. Product A weighs 29 pounds, and Product B weighs 116 pounds. Product A sells for $103 per pound, and Product B sells for $35 per pound.
Based on relative sales values at the split-off point, allocate joint costs to Products A and B. (Round relative sales value proportion to 4 decimal places eg.0.4525 and final answers to 0 decimal places.)
|Calculation of allocation of joint cost :|
|Product||Sales value||Allocated cost|
|Product A||29*103=2987||5840*2987/7047||$ 2,475|
|Product B||116*35=4060||5840*4060/7047||$ 3,365|
|Total||$ 7,047||$ 5,840|
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