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:

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.)

M1 M2 B1 Total Units produced 22,700 13,000 9,600 45,300 Allocated joint costs ? ? ? $ 386,000 Sales value at split-off $ 408,000 $ 272,000 $ 96,000 $ 776,000

Explanation / Answer

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?

Allocable cost = Joint cost-proceeds from by product = (386000-96000) = 290000

Joint cost of Product M1 Is 174000

Product Net realizable value Allocated cost M1 408000 290000*408000/680000 174000 M2 272000 290000*272000/680000 116000 Total 680000 290000

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