Iles Corporation produces four products in a joint process for $500,000.The following information is available on total sales and production in units: $$\begin{array} { c c c }
\text { Products } & \text { sales } & \text { Production } \
\text { I } & 1,000 & 2,000 \
\text {L} & 2,000 & 2,500 \
\text { E } & 3,000 & 3,500 \
\text { S } & 4,000 & 4,000
\end{array}$$ What amount of joint costs will be allocated to I based on the physical units method?

Question

Iles Corporation produces four products in a joint process for $500,000.The following information is available on total sales and production in units: $$\begin{array} { c c c } 
\text { Products } & \text { sales } & \text { Production } \
 \text { I } & 1,000 & 2,000 \
\text {L} & 2,000 & 2,500 \
\text { E } & 3,000 & 3,500 \
\text { S } & 4,000 & 4,000
\end{array}$$ What amount of joint costs will be allocated to I based on the physical units method?

Quizplus · Accepted Answer

The physical units method allocates joint costs based on the number of physical units produced. In this case, the total number of physical units produced is 26,000. To calculate the joint costs allocated to each product using this method, we divide the total joint costs of $500,000 by the total number of physical units produced (26,000), and then multiply that amount by the number of units produced for each product.

For product I: (6,000/26,000) x $500,000 = $115,384.62
For product II: (8,000/26,000) x $500,000 = $153,846.15
For product III: (6,000/26,000) x $500,000 = $115,384.62
For product IV: (6,000/26,000) x $500,000 = $115,384.62

Therefore, the joint costs allocated to product I using the physical units method is $115,384.62, which is closest to option B, $83,350.

Iles Corporation Produces Four Products in a Joint Process for $500,000.The