Question

PA10. LO 10.5 Calcion Industries produces two joint products, Y and Z. Prior to the split-off...

PA10. LO 10.5 Calcion Industries produces two joint products, Y and Z. Prior to the split-off point, the company incurred costs of $36,000. Product Y weighs 25 pounds and product Z weighs 75 pounds. Product Y sells for $150 per pound and product Z sells for $125 per pound. Based on a physical measure of output, allocate joint costs to products Y and Z.

Solution

Product Y pounds:                                        

Product Z pounds:                                         

Total pounds:                                                

Product Y allocation:

Product Z allocation:

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Answer #1

Product Z 75 pounds

Product Y 25 pounds

Joint cost is $36,000

Joint cost allocated to product Y under physical measure of output method

= 36,000 × (25 / 100) = $9,000

Joint cost allocated to product Z under physical measure of output method

= 36,000 × (75 / 100) = $27,000

Under physical measure of output method $27,000 allocated to product Z and $9,000 is allocated to product Y. Product Y weighted under measure of output is 25% (25 / 100) and product Z weight is 75% (75 / 100).

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