Harmon Inc. produces joint products L, M, and N from a joint process. Informatio

Question

Harmon Inc. produces joint products L, M, and N from a joint process. Information concerning a batch produced in May at a joint cost of $75,000 was as follows: L M N Total Separable Processing cost $10,000 $25,000 $2,000 $37,000 Units Produced 1,200 2,500 4,300 8,000 Sales Value at Split Off $45,000 $22,000 $4,500 $71,500 Sales Value (after addt’l processing) $60,000 $50,000 $7,000 $117,000 The amount of joint costs allocated to product L using the sales value method is closest to (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

Explanation / Answer

Particulars

L

M

N

Total

Unit Produced

1200

2500

4300

8000

Final sales value

60000

50000

7000

117000

Saperable processing cost

-10000

-25000

-2000

-37000

Joint cost (Note 1)

-47203

-23077

-4720

-75000

Net profit/loss

2797

1923

280

5000

Note 1

Particulars

L

M

N

Total

Sales value at split off

45000

22000

4500

71500

Sales value ratio

62.9371%

30.7692%

6.2937%

100%

Joint cost

47203

23077

4720

75000

Excel formulas

Note 1

Particulars

L

M

N

Total

Sales value at split off

45000

22000

4500

SUM(F14:H14)

Sales value ratio

F14/I14

G14/I14

H14/I14

SUM(F15:H15)

Joint cost

F15*I16

G15*I16

H15*I16

75000

* Information w.r.t. method of distribution of joint cost is not clear, the statement stating the same is incomplete hence we have used sales value method for all the joint product.

Particulars

L

M

N

Total

Unit Produced

1200

2500

4300

8000

Final sales value

60000

50000

7000

117000

Saperable processing cost

-10000

-25000

-2000

-37000

Joint cost (Note 1)

-47203

-23077

-4720

-75000

Net profit/loss

2797

1923

280

5000

Note 1

Particulars

L

M

N

Total

Sales value at split off

45000

22000

4500

71500

Sales value ratio

62.9371%

30.7692%

6.2937%

100%

Joint cost

47203

23077

4720

75000

Excel formulas

Note 1

Particulars

L

M

N

Total

Sales value at split off

45000

22000

4500

SUM(F14:H14)

Sales value ratio

F14/I14

G14/I14

H14/I14

SUM(F15:H15)

Joint cost

F15*I16

G15*I16

H15*I16

75000

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