Coconuts N More produces two joint products, Coconut Milk and Coconut Meat. The company uses the leftover Coconut Skin as a by-product. All three are produced from joint costs of $75,000: direct materials amounting to $50,000 and another $25,000 for direct labor and manufacturing overhead. Beginning inventory for all three products is zero. Information for production of the product is as follows: How much in joint costs should be allocated to the by-product, using the sales method?
A)$2,000.
B)$1,604.
C)$0.
D)$2,250.

Question

Coconuts N More produces two joint products, Coconut Milk and Coconut Meat. The company uses the leftover Coconut Skin as a by-product. All three are produced from joint costs of $75,000: direct materials amounting to $50,000 and another $25,000 for direct labor and manufacturing overhead. Beginning inventory for all three products is zero. Information for production of the product is as follows:  How much in joint costs should be allocated to the by-product, using the sales method?
A)$2,000. 
B)$1,604. 
C)$0. 
D)$2,250.

Quizplus · Accepted Answer

$0, all joint costs are allocated to the primary products

Coconuts N More Produces Two Joint Products, Coconut Milk and Coconut