A company incurs joint costs of $700 to produce 100 units of product A, 300 units of product B, and 500 units of product C. The 3 products sell for $1, $2, and $3 each, respectively. What amount of joint cost is allocated to product A if the sales value at split-off method is used?

Question

Quizplus · Accepted Answer

The sales value at split-off method allocates joint costs based on the proportion of each product's sales value at the split-off point. Product A's sales value is $100 (100 units x $1). The total sales value is $100 (A) + $600 (B) + $1500 (C) = $2200. The proportion for A is $100/$2200. Therefore, the joint cost allocated to A is $700 x ($100/$2200) = $31.82.

A Company Incurs Joint Costs of $700 to Produce 100