Doberman Company manufactures three products from a joint process. Joint costs for the year amounted to $250,000. The following data are also available: $$\begin{array}{l}
&&\text { Sales } V \text { alue at }\
\text { Product } & \text { Units Produced } & \text { Split- off } \
\mathrm{X} & \mathbf{5 , 0 0 0} & \$ 70,000 \
\mathrm{Y} & 3,000 & \$ 30,000 \
\mathrm{Z} & 2,000 & \$ 100,000
\end{array}$$ Assuming the relative- sales- value method of allocating joint costs, the amount of joint costs allocated to product Y would be:
A) $37,500
B) $250,000
C) $30,000
D) $75,000

Question

Quizplus · Accepted Answer

The relative-sales-value method allocates joint costs based on the proportion of each product's sales value at split-off to the total sales value. Product Y's sales value is $30,000, and the total sales value is $200,000 ($70,000 + $30,000 + $100,000). The proportion for Y is $30,000/$200,000 = 0.15. Therefore, the joint costs allocated to Y are 0.15 * $250,000 = $37,500.

Doberman Company Manufactures Three Products from a Joint Process Assuming the Relative- Sales- Value Method of Allocating Joint Costs