Question

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 uses the constant gross margin method to allocate joint costs
to products.

Calculate the amount of joint costs allocated to Product C. If your answer
is negative, put a minus sign in front of your answer with no spaces in
between (i.e., -100).

Answer 1

Statement of joint cost allocation

Particulars	Product A	Product B	Product C	Total
Revenue($)	750000	1000000	750000	2500000
Less: Gross margin@54%($) (Note 1)	(405000)	(540000)	(405000)	(1350000
Less : Seperable additional       Processing costs ($)	(225000)	(400000)	(375000)	(100000)
Joint Costs Allocated($)	120000	60000	(-30000)	1000

Note1: Calculation of Constant Gross Margin

Product	Product A	Product B	Product C	Total
Units	15000	25000	10000	50000
Unit price	$50	$40	$75
Revenue	$750000	$1000000	$750000	$2500000
Less: Joint Processing Costs				($150000)
Less: Seperable additional Processing Costs	($225000)	($400000)	($375000)	($1000000)
Gross Margin				$ 1350,000
Gross Margin Ratio=($1350,000*100)/$2500000=54%