Hibernation Company incurred $500,000 to manufacture the following products in a joint process: $$\begin{array} { | c | c | c | c | }
\hline & & & \text { Selling Price } \
\hline \text { Product } & \text { Units Produced } & \text { Weight per Unit } & \text { per Unit } \
\hline \mathrm { I } & 1,250 & 81 \mathrm { bs } . & \$ 5 \
\hline \mathrm { J } & 2,500 & 61 \mathrm { bs } . & 10 \
\hline \mathrm { K } & 3,750 & 4 \text { lbs. } & 10 \
\hline \mathrm { L } & 5,000 & 21 \mathrm { bs } . & 5 \
\hline
\end{array}$$ How much joint cost would be allocated to Product I based on the physical units method?

Question

Hibernation Company incurred $500,000 to manufacture the following products in a joint process: $$\begin{array} { | c | c | c | c | } 
\hline & & & \text { Selling Price } \
\hline \text { Product } & \text { Units Produced } & \text { Weight per Unit } & \text { per Unit } \
\hline \mathrm { I } & 1,250 & 81 \mathrm { bs } . & \$ 5 \
\hline \mathrm { J } & 2,500 & 61 \mathrm { bs } . & 10 \
\hline \mathrm { K } & 3,750 & 4 \text { lbs. } & 10 \
\hline \mathrm { L } & 5,000 & 21 \mathrm { bs } . & 5 \
\hline
\end{array}$$ How much joint cost would be allocated to Product I based on the physical units method?

Quizplus · Accepted Answer

The physical units method allocates joint costs based on the number of units produced. In this case, Product I has 1,250 units, which is 1,250/12,500 = 10% of the total units produced. Therefore, Product I would be allocated 10% of the $500,000 joint cost, which is $50,000.

Hibernation Company Incurred $500,000 to Manufacture the Following Products in a Joint