The Arvid Corporation manufactures widgets, gizmos, and turnbols from a joint process. May production is 2,000 widgets; 3,500 gizmos; and 4,000 turnbols. Respective per unit selling prices at splitoff are $30, $20, and $10. Joint costs up to the splitoff point are $75,000. If joint costs are allocated based upon the sales value at splitoff, what amount of joint costs will be allocated to the widgets?
A)$30,882
B)$26,471
C)$17,647
D)$28,125

Question

Quizplus · Accepted Answer

The sales value at splitoff for widgets is 2,000 units * $30 = $60,000. The total sales value at splitoff for all products is (2,000 * $30) + (3,500 * $20) + (4,000 * $10) = $60,000 + $70,000 + $40,000 = $170,000. The proportion of joint costs allocated to widgets is $60,000 / $170,000. Therefore, the joint costs allocated to widgets is $75,000 * ($60,000 / $170,000) = $26,471.

The Arvid Corporation Manufactures Widgets, Gizmos, and Turnbols from a Joint