Impacto Corporation produces four products in a joint process for $650,000. The following information is available on total sales and production in units: What amount of joint costs will be allocated to I based on the physical units method?

Question

Impacto Corporation produces four products in a joint process for $650,000. The following information is available on total sales and production in units:  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. To calculate the joint costs allocated to each product, divide the total joint costs by the total number of physical units produced, and then multiply that number by the number of physical units for each product. 
Joint cost per unit = $650,000 ÷ (30,000 + 40,000 + 25,000 + 15,000) = $8.125 per unit 
Product I's joint costs = 15,000 units x $8.125 per unit = $121,875 
Therefore, the answer is C ($108,355 is not an option provided in the question).

Impacto Corporation Produces Four Products in a Joint Process for $650,000