Problem 2 - Zenon Chemical, Inc. processes pine rosin into three products: turpe

Question

Problem 2 - Zenon Chemical, Inc. processes pine rosin into three products: turpentine, paint thinner, and spot remover. During May, the joint costs of processing were $240,000. Production and sales value information for the month is as follows: Product Units Produced Sales Value at Splitoff Point Turpentine 15,000 liters $120,000 Paint thinner 15,000 liters 100,000 Spot remover 7,500 liters 50,000 Question: Determine the amount of joint cost allocated to each product if the physical-measure method is used

Explanation / Answer

Total production (liters) = 15,000 + 15,000 + 7,500 = 37,500

Joint cost, Turpentine ($) = 240,000 x (15,000 / 37,500) = 96,000

Joint cost, Paint thinner ($) = 240,000 x (15,000 / 37,500) = 96,000

Joint cost, Spot remover ($) = 240,000 x (7,500 / 37,500) = 48,000

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