Ferrier Chemical Company makes three products, B7, K6, and X9, which are joint products from the same materials. In a standard batch of 150,000 pounds of raw materials, the company generates 35,000 pounds of B7, 75,000 pounds of K6, and 40,000 pounds of X9. A standard batch costs $600,000 to produce. The sales prices per pound are $6, $10, and $16 for B7, K6, and X9, respectively. Required: a. Allocate the joint product cost among the three final products using weight as the allocation base.

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Business

Felipe

21 September, 22:54

Ferrier Chemical Company makes three products, B7, K6, and X9, which are joint products from the same materials. In a standard batch of 150,000 pounds of raw materials, the company generates 35,000 pounds of B7, 75,000 pounds of K6, and 40,000 pounds of X9. A standard batch costs $600,000 to produce. The sales prices per pound are $6, $10, and $16 for B7, K6, and X9, respectively. Required: a. Allocate the joint product cost among the three final products using weight as the allocation base.

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Espinoza · Answer 1

Allocated cost:

B7 = 0.23*600,000 = 138,000

K6 = 0.50*600,000 = 300,000

X9 = 0.27*600,000 = 162,000

Explanation:

Giving the following information:

Ferrier Chemical Company makes three products, B7, K6, and X9, which are joint products from the same materials. In a standard batch of 150,000 pounds of raw materials, the company generates 35,000 pounds of B7, 75,000 pounds of K6, and 40,000 pounds of X9. A standard batch costs $600,000 to produce.

weighted average:

B7 = 35,000/150,000 = 0.23

K6 = 75,000/150,000 = 0.5

X9 = 40,000/150,000 = 0.27

Allocated cost:

B7 = 0.23*600,000 = 138,000

K6 = 0.50*600,000 = 300,000

X9 = 0.27*600,000 = 162,000