Figure 6-7
Suppose that a concrete manufacturer produces four grades of concrete totaling 500,000 cubic yards as follows at a joint cost of £2,000,000: $$\begin{array} { c c c }
\text { Grade } & \text { Cubic Yards } & \text { Sales Value } \
\text { A } & 75,000 & £ 375,000 \
\text { B } & 200,000 & 1,200,000 \
\text { C } & 100,000 & 700,000 \
\text { D } & 125,000 & 850,000
\end{array}$$
-Refer to Figure 6-7. What amount of joint costs will be allocated to Grade B using the final sales value method?

Question

Figure 6-7
Suppose that a concrete manufacturer produces four grades of concrete totaling 500,000 cubic yards as follows at a joint cost of £2,000,000: $$\begin{array} { c c c } 
\text { Grade } & \text { Cubic Yards } & \text { Sales Value } \
\text { A } & 75,000 & £ 375,000 \
\text { B } & 200,000 & 1,200,000 \
\text { C } & 100,000 & 700,000 \
\text { D } & 125,000 & 850,000
\end{array}$$
-Refer to Figure 6-7. What amount of joint costs will be allocated to Grade B using the final sales value method?

Quizplus · Accepted Answer

The final sales value method allocates joint costs based on the proportion of each product's final sales value to the total sales value. The total sales value is £3,125,000 (£375,000 + £1,200,000 + £700,000 + £850,000). Grade B's sales value is £1,200,000. Therefore, Grade B's share of the joint costs is (£1,200,000 / £3,125,000) * £2,000,000 = £768,000.

Figure 6-7 Suppose That a Concrete Manufacturer Produces Four Grades

Figure 6-7
Suppose That a Concrete Manufacturer Produces Four Grades