Butterfly Corp. manufactures products M1 and M2 from a joint process, which also

Question

Butterfly Corp. manufactures products M1 and M2 from a joint process, which also yields a by-product, B1. Butterfly accounts for the revenues from its by-product sales as other income. Additional information follows: M1 M2 B1 Total Units produced 24,600 13,900 9,600 48,100 Allocated joint costs ? ? ? $ 373,000 Sales value at split-off $ 396,000 $ 264,000 $ 91,000 $ 751,000 Required: Assuming that joint product costs are allocated using the net realizable value at split-off approach, what was the joint cost allocated to product M1? (Do not round intermediate calculations.)

Explanation / Answer

Calculate join cost allocated :

Allocable joint cost = 373000-91000 = 282000

Joint cost allocated to M1 = 282000*396000/660000 = 169200

Joint cost allocated to M2 = 282000*264000/660000 = 112800

So Joint cost allocated to product M1 = $169200

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