Data pertaining to a company's joint manufacturing process for the current period follows:
$\begin{array}{cc}
&\text { Product } & \text { Product } \
&\text { A } & \text { B }\\text { Quantities produced }&200 \mathrm{lbs}&100 \mathrm{lbs}\\text { Processing cost after }\\text { products are separated }&\$1,1000&\$400\\text { Market value at point }\\text { of separation }&\$ 8 / \mathrm{lb.}&\$ 16 / \mathrm{lb.}
\end{array}$
What cost amount should be allocated to Product A for this period's $660 of joint costs on the basis of market value at the point of separation?

Question

Data pertaining to a company's joint manufacturing process for the current period follows: 
$\begin{array}{cc}
&\text { Product } & \text { Product } \
&\text { A } & \text { B }\\text { Quantities produced }&200 \mathrm{lbs}&100 \mathrm{lbs}\\text { Processing cost after }\\text { products are separated }&\$1,1000&\$400\\text { Market value at point }\\text { of separation }&\$ 8 / \mathrm{lb.}&\$ 16 / \mathrm{lb.}
\end{array}$
What cost amount should be allocated to Product A for this period's $660 of joint costs on the basis of market value at the point of separation?

Quizplus · Accepted Answer

The correct answer is A because the market value of Product A at the point of separation is $8 per pound, and 200 pounds of Product A were produced. Therefore, the total market value of Product A at the point of separation is $8 x 200 = $1,600. The proportion of joint costs allocated to Product A is $660 x ($1,600 / ($1,600 + $800)) = $330.

Data Pertaining to a Company's Joint Manufacturing Process for the Current