Data pertaining to a company's joint production for the current period follows: $\begin{array}{llcc}
& \text { L } & \text { M } \
\text { Quantities produced } &200 \text {Ibs}&150 \text {Ibs}\
\text { Market value at split-off point } &\$8/ \text {Ib}&\$16/ \text {Ib}\
\end{array}$
Compute the cost to be allocated to Product L for this period's $660 of joint costs if the value basis is used. (Do not round your intermediate calculations.)
A) $796.
B) $264.
C) $396.
D) $330.
E) $1,364.

Question

Data pertaining to a company's joint production for the current period follows: $\begin{array}{llcc}
 & \text { L } &  \text { M } \
 \text { Quantities produced } &200 \text {Ibs}&150  \text {Ibs}\
 \text { Market value at split-off point } &\$8/ \text {Ib}&\$16/ \text {Ib}\
\end{array}$
 Compute the cost to be allocated to Product L for this period's $660 of joint costs if the value basis is used. (Do not round your intermediate calculations.)
A) $796.
B) $264.
C) $396.
D) $330.
E) $1,364.

Quizplus · Accepted Answer

The cost allocated to Product L is calculated by determining the proportion of the total market value at the split-off point that Product L represents, and then applying that proportion to the total joint costs. Product L's market value is $200 \text{ lbs} \times \$8/\text{lb} = \$1600$. Product M's market value is $150 \text{ lbs} \times \$16/\text{lb} = \$2400$. The total market value is $ \$1600 + \$2400 = \$4000$. The proportion for Product L is $\$1600/\$4000 = 0.4$. Therefore, the cost allocated to Product L is $0.4 \times \$660 = \$264$.

Data Pertaining to a Company's Joint Production for the Current