RKH Corporation produces three joint products. During a recent accounting period, joint costs totalled $365 and RKH had no beginning inventories. Additional data appear below: M1 M2 M3
Volume (kilograms)150 50 300
Sales value at the split-off point $375 $155 $600
Sales value after further processing $450 $200 $900
Separable costs $50 $35 $100
Using the constant gross margin NRV method, the total joint costs allocated to the three products will be:
A)$0
B)$185
C)$365
D)$550

Question

Quizplus · Accepted Answer

Using the constant gross margin NRV method, the total joint costs allocated to each product is calculated as follows:

Product M1:
($450 - $50) / ($450 + $200 + $900 - $365) * $365 = $121.94

Product M2:
($200 - $35) / ($450 + $200 + $900 - $365) * $365 = $52.50

Product M3:
($900 - $100) / ($450 + $200 + $900 - $365) * $365 = $190.56

Total allocated joint costs = $365

Therefore, the correct answer is option C, which is $365.

RKH Corporation Produces Three Joint Products