Please provide a step by step how to and highlight the answer (product cost) Ark
ID: 2424527 • Letter: P
Question
Please provide a step by step how to and highlight the answer (product cost)
Arkansas Corporation manufactures liquid chemicals A and B from a joint process. It allocates joint costs on the basis of sales value at split-off. Processing 4,600 gallons of product A and 1,000 gallons of product B to the split-off point costs $5,500. The sales value at split-off is $3.00 per gallon for product A and S32.20 for product B. Product B requires an additional separable process beyond split-off at a cost of $2.10 per gallon before it can be sold. Required: What is the company's cost to produce 1,000 gallons of product B?Explanation / Answer
Joint Cost — Relative Sales Value at Splitoff
Particulars
A
B
Total
Production
4,600
1,000
5,600
Unit Price
3
32
35
Relative Sales Value
13,800
32,200
46,000
Percent Sales Value
30%
70%
30.700%
A
Joint Joint Cost allocated
1,650
3,850
5,500
Cost per Unit
0.36
3.85
B
Addional Cost per Unit
2.1
B
Total Additional Cost
2,100
C=A+B
Product Cost B
5,950
Joint Cost — Relative Sales Value at Splitoff
Particulars
A
B
Total
Production
4,600
1,000
5,600
Unit Price
3
32
35
Relative Sales Value
13,800
32,200
46,000
Percent Sales Value
30%
70%
30.700%
A
Joint Joint Cost allocated
1,650
3,850
5,500
Cost per Unit
0.36
3.85
B
Addional Cost per Unit
2.1
B
Total Additional Cost
2,100
C=A+B
Product Cost B
5,950
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