Ramos Corporation uses the physical-units method to allocate costs among its three joint products: X, Y, and Z. The following data are available for the period just ended:
Joint processing cost: $800,000
Total production: 150,000 pounds
Share of joint cost allocated to X: $160,000
Share of joint cost allocated to Y: $400,000
Which of the following statements is true?
A) The company would have relied on the sales value of each product when allocating joint costs to X, Y, and Z.
B) Ramos produced 30,000 pounds of Z during the period.
C) Ramos produced 45,000 pounds of Z during the period.
D) Ramos produced 105,000 pounds of Z during the period.
E) Based on the data presented, it is not possible to determine Ramos' production of Z during the period.

Question

Quizplus · Accepted Answer

The total joint processing cost is $800,000, with $160,000 allocated to X and $400,000 to Y, leaving $240,000 for Z. Using the physical-units method, the cost allocation is proportional to the production. Therefore, Z's production is (240,000/800,000) * 150,000 = 45,000 pounds.

Ramos Corporation Uses the Physical-Units Method to Allocate Costs Among