sing Sales value at split off (SVso), joint cost allocated to A = using Net real

Question

sing Sales value at split off (SVso), joint cost allocated to A =

  

using Net realizable value method (NRV), joint cost allocated to A =

using physical (volume) measure, the cost allocated to B =

using physical (volume) measure, the cost allocated to A =

$1,000

$7,000

between $6,800 and $6,890

between $5,200 and $5,300

$4,000

$4,800

between $5,100 and $5,200

$3,500

$6,000

between $3,100 and $3,500

$7,200

between $6,100 and $6,300

$8,000

$10,000

North Company produces two types of chocolates (A&B). Product B needs additional costs to transform to Improved B. Incurred joint costs: $12,000 Products A B Improved B Additional costs $10,000 Beginning inventory 0 0 0 Production (units) 400 300 200 Further processing 300 Sales (units) 400 200 Ending inventory 0 0 0 Selling price at split off 30 60 Selling price beyond split off 90

Explanation / Answer

using physical (volume) measure, the cost allocated to A:

Option c.between $6,800 and $6,890 is correct

Sales value at split off (SVso), joint cost allocated to A:

Net realizable value method (NRV), joint cost allocated to A:

Product A B Total a Physical units 400 300 700 b Percentage of total units 57.14% 42.86% c Total joint cost        12,000        12,000 d=c*b Allocated joint cost           6,857           5,143

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