Question

Christiansen Corporation manufactures joint products W and X. During a recent period, joint costs amounted to...

Christiansen Corporation manufactures joint products W and X. During a recent period, joint costs amounted to $450,000 in the production of 20,000 gallons of W and 50,000 gallons of X. Both products will be processed beyond the split-off point, giving rise to the following data:
  

W X
  Separable processing costs $40,000 $160,000
  Sales price (per gallon) if processed beyond split-of $15 $13

The joint cost allocated to W under the net-realizable-value method would be: (Do not round your intermediate calculations.)

$128,571.

$110,000.

$142,105.

$156,000.

None of these.

Business   Accounting   
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Answer #1

Answer :  $156,000

Explanation :

W X
Units 20,000 gallons 50,000 gallons
* Sales price per gallon $15 $13
= Sales value $300,000 $650,000
- Separable processing costs ($40,000) ($160,000)
Net-realizable-value (NRV) $260,000 $490,000

Joint cost allocated to W under the net-realizable-value method

= (NRV of Producct W / NRV of total production) * Joint Costs

= [$260,000 / ($260,000 + $490,000) ] *  $450,000

= ($260,000 / $750,000) * $450,000

= $156,000

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