Data pertaining to a company's joint production for the current period follows:
A B
Quantities produced…………………. 200 lbs.100 lbs.
Processing cost after
Products are separated…………….. $1,100 $400
Market value at point
Of separation………………………. $8/lb. $16/lb.
Compute the cost to be allocated to Product A for this period's $660 of joint costs if the value basis is used.

Question

Data pertaining to a company's joint production for the current period follows:
A B
Quantities produced…………………. 200 lbs.100 lbs.
    Processing cost after
Products are separated…………….. $1,100 $400
Market value at point
Of separation………………………. $8/lb. $16/lb.
Compute the cost to be allocated to Product A for this period's $660 of joint costs if the value basis is used.

Quizplus · Accepted Answer

The value basis allocates joint costs based on the relative market value at the point of separation. Product A's market value is 200 lbs. * $8/lb. = $1,600, and Product B's is 100 lbs. * $16/lb. = $1,600. The total market value is $3,200. Product A's share is $1,600/$3,200 = 0.5. Therefore, Product A's allocated joint cost is 0.5 * $660 = $330.00.

Data Pertaining to a Company's Joint Production for the Current