Use the information below to answer the following question(s).Cranbrook Chemical Ltd.manufactures two industrial compounds.In the month of May, 15,000 litres of direct material costing $160,000 were processed at a cost of $400,000.The joint process yielded 16,000 containers of a compound known as Jarlon and 4,000 containers of a compound known as Kharton.The respective selling prices of Jarlon and Kharton are $38 and $58.Both products may be processed further.Jarlon may be processed into Jaxton at an incremental cost of $8 per jar of the final product while Kharton may be processed into Kraxton at an additional cost of $32 per jar of the final product.The volume of jars of the final product are: 12,000 and 3,000 for Jaxton and Kraxton respectively.The selling price of Jaxton is $48 per jar.The selling price of Kraxton is $102 per jar.
-Using the physical measures method, the joint costs allocated to Jarlon would be
A)$320,000.
B)$112,000.
C)$405,328.
D)$448,000.
E)$289,520

Question

Quizplus · Accepted Answer

The physical measures method allocates joint costs based on the relative weight or volume of the products at the split-off point. In this case, the total volume of Jarlon and Kharton at split-off is 16,000 + 4,000 = 20,000 containers. The volume of Jarlon at split-off is 16,000 containers, which represents 80% of the total volume. Therefore, 80% of the joint costs of $400,000 is allocated to Jarlon:
$400,000 x 80% = $320,000
This is the joint cost allocated to Jarlon at split-off, before any further processing.

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