Jordan, Inc. produces 2 products from a joint process costing $24,000. The results from the most recent period follow: Sales Value Separable Sales Value After
Product Tons at Split-Off Costs Further Processing
Alpha-1 800 $10,000 $12,000 $24,000
Alpha-2 400 8,000 4,000 20,000
Waste 200 --- --- ---
If Jordan uses the sales value at split-off point method, the joint costs allocated to Alpha-2 would be:

Question

Quizplus · Accepted Answer

The sales value at split-off point for Alpha-1 is $10,000 and for Alpha-2 is $8,000. Therefore, the total sales value at split-off point is $18,000. To allocate joint costs to Alpha-2 using the sales value at split-off point method, we will use the following formula:

Joint costs allocated to Alpha-2 = (Sales value at split-off point for Alpha-2 / Total sales value at split-off point) * Joint costs

Joint costs allocated to Alpha-2 = (8,000 / 18,000) * 24,000 = $10,667

Therefore, the best choice is B, with the above explanation.