Brite Surface Company Brite Surface Company produces four floor cleaners from the same process: C, D, E, and G. Joint product costs are $9,000. (Round all answers to the nearest dollar.)
If Brite Surface sells the products after further processing, the following disposal costs will be incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00.
Refer to Brite Surface Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product E?

Question

Brite Surface Company Brite Surface Company produces four floor cleaners from the same process: C, D, E, and G. Joint product costs are $9,000. (Round all answers to the nearest dollar.)
 If Brite Surface sells the products after further processing, the following disposal costs will be incurred: C, $2.50; D, $1.00; E, $3.50; G, $6.00.
Refer to Brite Surface Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product E?

Quizplus · Accepted Answer

To allocate joint processing costs based on sales value at split-off, we need to calculate the total sales value of all the products at split-off point.

Total sales value at split-off = Sales value of C at split-off + Sales value of D at split-off + Sales value of E at split-off + Sales value of G at split-off

We can find the sales value of each product at split-off by deducting its disposal cost from its selling price after further processing:

Sales value of C at split-off = Selling price of C - Disposal cost of C = $80 - $2.50 = $77.50
Sales value of D at split-off = Selling price of D - Disposal cost of D = $50 - $1.00 = $49.00
Sales value of E at split-off = Selling price of E - Disposal cost of E = $110 - $3.50 = $106.50
Sales value of G at split-off = Selling price of G - Disposal cost of G = $160 - $6.00 = $154.00

Total sales value at split-off = $77.50 + $49.00 + $106.50 + $154.00 = $387.00

To allocate joint processing costs to Product E, we need to use the following formula:

Joint processing costs allocated to E = Total joint processing costs * (Sales value of E at split-off / Total sales value at split-off)

Joint processing costs allocated to E = $9,000 * ($106.50 / $387.00) = $2,475.38

Rounding to the nearest dollar, we get:

Joint processing costs allocated to E = $2,476

Therefore, the answer is D: $2,276.

Brite Surface Company Brite Surface Company Produces Four Floor Cleaners