Figure 7-7 Eden Company manufactures two products, Brights and Dulls, from a joint process.A production run costs $50,000 and results in 250 units of Brights and 1,000 units of Dulls.Both products must be processed past the split-off point, incurring separable costs for Brights of $60 per unit and $40 per unit for Dulls.The market price is $250 for Brights and $200 for Dulls.
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Refer to Figure 7-7.What is the amount of joint costs allocated to Dulls using the physical units method?

Question

Quizplus · Accepted Answer

The physical units method allocates joint costs based on the proportion of total units produced. Dulls make up 1,000 out of 1,250 total units (250 Brights + 1,000 Dulls), which is 80%. Therefore, 80% of the $50,000 joint costs is allocated to Dulls, which is $40,000.

Figure 7-7 Eden Company Manufactures Two Products, Brights and Dulls