Company manufactures three products from a joint process. Joint costs for the year amounted to $250,000. The following data was available: Product Units Produced Sales Value at Splitminusoff X 5,000 $70,000 Y 3,000 $30,000 Z 2,000 $100,000 Assume the relative-sales-value method of allocating joint costs is used. What amount of joint costs is allocated to Product X?

Question

Mathematics

Nia

1 September, 00:38

Company manufactures three products from a joint process. Joint costs for the year amounted to $250,000. The following data was available: Product Units Produced Sales Value at Splitminusoff X 5,000 $70,000 Y 3,000 $30,000 Z 2,000 $100,000 Assume the relative-sales-value method of allocating joint costs is used. What amount of joint costs is allocated to Product X?

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Eduardo Pineda · Answer 1

The amount of joint cost allocated to Product X is $87,500.

Step-by-step explanation:

The formula to compute the joint cost of a product is:

Joint Cost of Product = (Total Joint cost * Sales value of the Product) : Total sales value.

The information provided:

Total Joint cost = $250,000

Sales value of Split-off of X = $70,000

Sales value of Split-off of Y = $30,000

Sales value of Split-off of Z = $100,000

Compute the value of Total sales as follows:

Total Sales value = Sales value of Split-off of (X + Y + Z)

= 70000 + 30000 + 100000

= 20000

Compute the amount of joint cost allocated to Product X as follows:

Joint Cost of Product = (250000 * 70000) : 200000

= 17500000000 : 200000

= 87500

Thus, the amount of joint cost allocated to Product X is $87,500.