Product X is sold for $8 a unit and Product Y is sold for $12 a unit. Each product can also be sold at the splitoff point. Product X can be sold for $5 and Product Y for $4. Joint costs for the two products totaled $4,000 for January for 600 units of X and 500 units of Y. What are the respective joint costs assigned each unit of products X and Y if the sales value at splitoff method is used?
A) $2.96 and $4.44
B) $4.00 and $4.55
C) $4.00 and $3.20
D) $4.55 and $4.55
E) $3.20 and $4.00

Question

Quizplus · Accepted Answer

First, we need to determine the total sales value at splitoff. We can do this by multiplying the number of units by the sales value at splitoff for each product:

Product X: 600 units * $5 per unit = $3,000 
Product Y: 500 units * $4 per unit = $2,000

Total sales value at splitoff: $5,000

Next, we need to allocate the joint costs to each product using the sales value at splitoff method.

Product X: ($3,000 / $5,000) * $4,000 = $2,400 
Product Y: ($2,000 / $5,000) * $4,000 = $1,600

Total joint cost allocation: $2,400 + $1,600 = $4,000

Now we can calculate the joint cost per unit for each product:

Product X: $2,400 / 600 units = $4.00 per unit 
Product Y: $1,600 / 500 units = $3.20 per unit

Therefore, the respective joint costs assigned to each unit of products X and Y are $4.00 and $3.20, making option C the correct choice.

Product X Is Sold for $8 a Unit and Product