Baker Company produces three products: A, B, and C from the same process. Joint

Question

Baker Company produces three products: A, B, and C from the same process. Joint costs for this production run are $2,100.

Pounds

Sales price
per lb. at
split-off

Disposal
cost per
lb. at
split-off

Further
processing
per pound

Final
sales price
per pound

  800

$6.50

$3.00

$2.00

$ 7.50

1,100

8.25

4.20

3.00

10.00

1,500

8.00

4.00

3.50

10.50

If the products are processed further, Baker Company will incur the following disposal costs upon sale: A, $3.00; B, $2.00; and C, $1.00.

a. Using a physical measurement method, what amount of joint processing cost is allocated to Product A (round to the nearest dollar)?

$700

$679

$927

$494

b. Using a physical measurement method, what amount of joint processing cost is allocated to Product B (round to the nearest dollar)?

$494

$679

$927

$700

c. Using sales value at split-off, what amount of joint processing cost is allocated to Product B (round to the nearest dollar)?

$700

$416

$725

$959

Pounds

Sales price
per lb. at
split-off

Disposal
cost per
lb. at
split-off

Further
processing
per pound

Final
sales price
per pound

A

  800

$6.50

$3.00

$2.00

$ 7.50

B

1,100

8.25

4.20

3.00

10.00

C

1,500

8.00

4.00

3.50

10.50

Explanation / Answer

Total physical unit = 800+1100+1500 = 3400

a) Joint processing cost is allocated to product A = (2100*800/3400) = 494

so answer is d) 494

b) Joint processing cost is allocated to product B = (2100*1100/3400) = 679

so answer is b) 679

c) Sale value at split off point = (800*6.50+1100*8.25+1500*8) = 26275

Joint processing cost allocated to product B = 2100*9075/26275 = 725

so answer is c) 725

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.