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 net realizable value 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) $3,614.
B) $4,688.
C) $23,438.
D) $33,434.
E) $46,875.

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 net realizable value 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) $3,614. 
B) $4,688. 
C) $23,438. 
D) $33,434. 
E) $46,875.

Quizplus · Accepted Answer

First, we need to calculate the total sales value for each product:
- Product L: 5,000 units x $30/unit = $150,000
- Product M: 6,000 units x $25/unit = $150,000
- Product N: 8,000 units x $20/unit = $160,000

Next, we need to calculate the total sales value for all joint products:
$150,000 + $150,000 + $160,000 = $460,000

Then, we can calculate the allocation of joint costs to each product using the net realizable value method:
- Product L: ($150,000 / $460,000) x $75,000 = $24,657.53
- Product M: ($150,000 / $460,000) x $75,000 = $24,657.53
- Product N: ($160,000 / $460,000) x $75,000 = $26,684.78

Therefore, the amount of joint costs allocated to product N using the net realizable value method is $26,684, rounded to the nearest whole dollar, which is answer choice B.