Question

Bennett Company produces two products from a joint process: A and C. Joint processing costs for this production cycle are $9,000.

	Yards	Sales price per yard at split-off	Disposal cost per yard at split-off	Further processing per yard	Final sale price per yard
A	1,800	$7.00	$4.50	$1.50	$8.00
C	2,600	10.00	6.00	3.50	12.25

If A and C are processed further, no disposal costs will be incurred or such costs will be borne by the buyer.

Refer to Bennett Company. Using a physical measure, what amount of joint processing cost is allocated to Product C (round to the nearest dollar)?

Select one:

a. $4,500

b. $6,062

c. $5,318

d. $3,682

Answer 1

Joint processing costs = $9,000

Quantity of Product A = 1,800 yards

Quantity of Product C = 2,600 yards

Total quantity of product A and product C = Quantity of Product A + Quantity of Product C

= 1,800 + 2,600

= 4,400 yards

Joint processing costs per yard = Joint processing costs/Total quantity of product A and product C

= 9,000/4,400

= $2.0454545455

Joint processing costs allocated to Product C = Joint processing costs per yard x Quantity of Product C

= 2.0454545455 x 2,600

= $5,318

Correct option is (c)

Using a physical measure, amount of joint processing cost allocated to Product C (round to the nearest dollar) = $5,318