Laredo Corporation, which manufactures products W, X, Y, and Z through a joint process costing $24,000, has the following data for 2018: $$\begin{array} { c c c }
\text { Product } & \text { Units Produced } & \begin{array} { c }
\text { Total Sales Value } \
\text { at Split-Off }
\end{array} \
\text { W } & 10,000 & \$ 5,000 \
\text { X } & 6,000 & 2,500 \
\text { Y } & 16,000 & 3,000 \
\text { Z } & 8,000 & 4,500
\end{array}$$ What is the amount of joint costs assigned to product W using the physical units method?

Question

Laredo Corporation, which manufactures products W, X, Y, and Z through a joint process costing $24,000, has the following data for 2018: $$\begin{array} { c c c } 
\text { Product } & \text { Units Produced } & \begin{array} { c } 
\text { Total Sales Value } \
\text { at Split-Off }
\end{array} \
\text { W } & 10,000 & \$ 5,000 \
\text { X } & 6,000 & 2,500 \
\text { Y } & 16,000 & 3,000 \
\text { Z } & 8,000 & 4,500
\end{array}$$ What is the amount of joint costs assigned to product W using the physical units method?

Quizplus · Accepted Answer

The physical units method allocates joint costs based on the proportion of units produced. Product W has 10,000 units out of a total of 40,000 units (10,000 + 6,000 + 16,000 + 8,000). Therefore, the joint cost assigned to W is (10,000/40,000) * $24,000 = $6,000.

Laredo Corporation, Which Manufactures Products W, X, Y, and Z