Data pertaining to a company's joint production for the current period follows: Compute the cost to be allocated to Product A for this period's $660 of joint costs if the value basis is used.
A) $330.00.
B) $440.00.
C) $220.00.
D) $194.12.
E) $484.00.

Question

Quizplus · Accepted Answer

To allocate joint costs based on the value basis, we need to use the relative sales value method. The total sales value of all products resulting from joint production is divided by the total physical quantity of all products. The resulting ratio is multiplied by the physical quantity of each product to find its allocated value.

In this case, the total sales value of Product A and Product B is $1,320 ($660 ÷ 0.5). The physical quantity of Product A is 100 and the total physical quantity is 200, so the ratio for Product A is 0.5 (100 ÷ 200).

Allocated cost of Product A = 0.5 x $660 = $330

Therefore, the answer is A.

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