Exhibit 7-8
Petro Inc.produces two joint products,product A and B.Prior to the split-off point,the company incurred $600,000 in joint costs.Production totaled 72,000 pounds for product A and 48,000 pounds for product B.
-Refer to Exhibit 7-8.What amount of joint costs is allocated to product B using the physical quantities method (pounds)?

Question

Quizplus · Accepted Answer

To allocate joint costs using the physical quantities method (pounds), we need to calculate the proportion of each product's total production to the total production of both products.

Product A proportion = 72,000 / (72,000 + 48,000) = 0.6
Product B proportion = 48,000 / (72,000 + 48,000) = 0.4

Then, we allocate the joint costs based on these proportions:

Joint costs allocated to product A = 0.6 * $600,000 = $360,000
Joint costs allocated to product B = 0.4 * $600,000 = $240,000

Therefore, the answer is B ($240,000).

Exhibit 7-8 Petro Inc.produces Two Joint Products,product a and B.Prior to the to the Split-Off