A firm produces three items from a single process in batches containing 40 units A (a by-product); 100 units B; 100 units C. Separable costs and selling prices are:

Joint process costs are $30 000 per batch.
What is the amount of joint costs that would be allocated to B using the net realisable value method and treats by-product revenue as a reduction of the cost of the principal products?

Question

A firm produces three items from a single process in batches containing 40 units A (a by-product); 100 units B; 100 units C. Separable costs and selling prices are:

Joint process costs are $30 000 per batch.
What is the amount of joint costs that would be allocated to B using the net realisable value method and treats by-product revenue as a reduction of the cost of the principal products?

Quizplus · Accepted Answer

The Answer of A firm produces three items from a single process in batches containing 40 units A (a by-product); 100 units B; 100 units C. Separable costs and selling prices are:

Joint process costs are $30 000 per batch.
What is the amount of joint costs that would be allocated to B using the net realisable value method and treats by-product revenue as a reduction of the cost of the principal products?

A Firm Produces Three Items from a Single Process in Batches