Harmon Inc. produces joint products L, M, and N from a joint process. Information concerning a batch produced in May at a joint cost of $75,000 was as follows:The amount of joint costs allocated to product N using the physical measure method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):
A) $23,438.
B) $33,434.
C) $40,313.
D) $27,109.
E) $11,250.

Question

Harmon Inc. produces joint products L, M, and N from a joint process. Information concerning a batch produced in May at a joint cost of $75,000 was as follows:The amount of joint costs allocated to product N using the physical measure method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):
A) $23,438. 
B) $33,434. 
C) $40,313. 
D) $27,109. 
E) $11,250.

Quizplus · Accepted Answer

Physical measure method allocates joint costs based on the physical quantity of the product. The total physical units produced for L, M, and N were 2,500, 4,000, and 3,000 respectively. Therefore, the percentage of the physical units for N is 3,000 / 9,500 = 31.5789%.

The joint cost allocated to N using the physical measure method is:
$75,000 x 31.5789% = $23,684.21

However, this method may not be the most accurate due to the fact that some products may require more processing than others which may cost more. But based on the information given, choice C is the closest approximation for the allocation of joint costs for product N using the physical measure method.