Answer the following questions using the information below:
The Ashram Corporation processes a liquid component up to the splitoff point where two products, Mr. DirtOut and Mr. SinkClean, are produced and sold. There was no beginning inventory. The following material was collected for the month of January:
Direct materials processed: 250,000 gallons (242,500 gallons of good product)
Production: Mr. DirtOut 147,500 gallons
Mr. SinkClean 95,000 gallons
Sales: Mr. DirtOut 140,500 at $110 per gallon
Mr. SinkClean 91,000 at $ 100 per gallon
The cost of purchasing 250,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 242,500 gallons of good product was $760,000.
-When using a physical-volume measure, what is the approximate amount of joint costs that will be allocated to Mr. DirtOut and Mr. SinkClean?
A) $464,232 and $297,768
B) $461,252 and $298,748
C) $448,400 and $311,600
D) $454,404 and $305,596

Question

Answer the following questions using the information below:
The Ashram Corporation processes a liquid component up to the splitoff point where two products, Mr. DirtOut and Mr. SinkClean, are produced and sold. There was no beginning inventory. The following material was collected for the month of January:
Direct materials processed: 250,000 gallons (242,500 gallons of good product)
Production: Mr. DirtOut 147,500 gallons
 Mr. SinkClean 95,000 gallons
Sales: Mr. DirtOut 140,500 at $110 per gallon
 Mr. SinkClean 91,000 at $ 100 per gallon
The cost of purchasing 250,000 gallons of direct materials and processing it up to the splitoff point to yield a total of 242,500 gallons of good product was $760,000.
-When using a physical-volume measure, what is the approximate amount of joint costs that will be allocated to Mr. DirtOut and Mr. SinkClean?
A) $464,232 and $297,768
B) $461,252 and $298,748
C) $448,400 and $311,600
D) $454,404 and $305,596

Quizplus · Accepted Answer

The joint costs are allocated based on the physical volume of the products. The total good product volume is 242,500 gallons, with Mr. DirtOut being 147,500 gallons and Mr. SinkClean being 95,000 gallons. The allocation of joint costs to Mr. DirtOut is (147,500 / 242,500) * $760,000 = $464,232 approximately. For Mr. SinkClean, it's (95,000 / 242,500) * $760,000 = $297,768 approximately.

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