Tanner Corporation produced 3,660 units, consisting of three separate products, in a joint process for the year. The market for these products was so unstable that it was not practical to estimate the selling price of the products. A cost of $425,000 was incurred in the joint process. Product X's production was 80% of product Y's while product Z's production was 125% of product Y's. What is the amount of the joint cost allocable to product X (rounded to the nearest whole dollar) assuming Tanner uses the physical quantities method of allocation?
A) $111,475.
B) $114,865.
C) $139,344.
D) $141,667.

Question

Quizplus · Accepted Answer

Tanner Corporation produced 3,660 units, consisting of three separate products, in a joint process for the year. The market for these products was so unstable that it was not practical to estimate the selling price of the products. A cost of $425,000 was incurred in the joint process. Product X's production was 80% of product Y's while product Z's production was 125% of product Y's. Product X's production was 80% of product Y's, so the ratio of X to Y is 80:100, or 4:5. Product Z's production was 125% of product Y's, so the ratio of Z to Y is 125:100, or 5:4. The total ratio of X:Y:Z is 4:5:5, or 14:15:15. The amount of the joint cost allocable to product X is $425,000 * 14/44 = $114,865.

Tanner Corporation Produced 3,660 Units, Consisting of Three Separate Products