Johnson Company Ellis Company produces two products from a joint process: A and C Joint processing costs for this production cycle are $9,000. If A and C are processed further,no disposal costs will be incurred or such costs will be borne by the buyer.
Refer to Johnson Company.Using approximated net realizable value at split-off,what amount of joint processing cost is allocated to Product A (round to the nearest dollar)?

Question

Johnson Company Ellis Company produces two products from a joint process: A and C Joint processing costs for this production cycle are $9,000.  If A and C are processed further,no disposal costs will be incurred or such costs will be borne by the buyer.
Refer to Johnson Company.Using approximated net realizable value at split-off,what amount of joint processing cost is allocated to Product A (round to the nearest dollar)?

Quizplus · Accepted Answer

The approximated net realizable value at split-off for Product A and C are $3,950 and $5,150 respectively, totaling $9,100. To allocate joint processing costs using the net realizable value method, we divide the net realizable value of each product by the total net realizable value, then multiply by the total joint processing cost. For Product A, this would be ($3,950 / $9,100) * $9,000 = $3,914. However, since we need to round to the nearest dollar, the allocation for Product A would be $3,014.

Johnson Company Ellis Company Produces Two Products from a Joint