TMCC Inc. produces joint products A, B, and C from a joint process. Information
ID: 2339358 • Letter: T
Question
TMCC Inc. produces joint products A, B, and C from a joint process. Information concerning a batch produced in May at a joint cost of $120,000 was as follows:
A
B
C
Total
Units Sold
2,500
4,000
1,500
8,000
Price (after addt'l processing)
$
35
$
22
$
15
Separable Processing cost
$
35,000
$
12,000
$
16,000
$
63,000
Units Produced
2,500
4,000
1,500
8,000
Total Joint Cost
$
120,000
Sales Price at Split-off
$
25
$
12
$
13
Required:
(Calculate all ratios, percentages, and unit costs to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar.):
1. Allocate the joint costs to the joint products using the physical measure method.
2. Allocate the joint costs to the joint products using the sales value method.
3. Allocate the joint costs to the joint products using the net realizable method.
Joint Cost Allocated
A
B
C
1. Physical Measure
2. Sales Value
3. NRV
A
B
C
Total
Units Sold
2,500
4,000
1,500
8,000
Price (after addt'l processing)
$
35
$
22
$
15
Separable Processing cost
$
35,000
$
12,000
$
16,000
$
63,000
Units Produced
2,500
4,000
1,500
8,000
Total Joint Cost
$
120,000
Sales Price at Split-off
$
25
$
12
$
13
Explanation / Answer
Req a: Allocation of Joint cost: Product Physical Units Proportion Joint cost Allocation A 2500 31.25% 120000 37500 B 4000 50% 120000 60000 C 1500 18.75% 120000 22500 Total 8000 120000 120000 Req b: Allocation of Joint cost: Product Selling price Physical Units Sales value Proportion Joint cost Allocation A 25 2500 62500 48.08% 120000 57692 B 12 4000 48000 36.92% 120000 44308 C 13 1500 19500 15.00% 120000 18000 Total 8000 130000 100.00% 120000 120000 Req c: Allocation of Joint cost: Product Selling price Physical Units Sales value Further cost NRV Proportion Joint cost Allocation A 35 2500 87500 35000 52500 38.89% 120000 46667 B 22 4000 88000 12000 76000 56.30% 120000 67556 C 15 1500 22500 16000 6500 4.81% 120000 5777 Total 8000 198000 63000 135000 100.00% 120000 120000 Joint cost allocated A B C Physical measure 37500 60000 22500 sales value 57692 44308 18000 NRV 46667 67556 5777
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