C Limited produces two products (A and B) from a particular joint process.Each product may be sold at split-off or may be further processed.Joint production costs for the year amounted to $60 000.Sales values and costs are as follows.If the joint production costs were assigned using the net realisable value method,the joint costs allocated to B would be:

Question

C Limited produces two products (A and B) from a particular joint process.Each product may be sold at split-off or may be further processed.Joint production costs for the year amounted to $60 000.Sales values and costs are as follows.If the joint production costs were assigned using the net realisable value method,the joint costs allocated to B would be:
C Limited produces two products (A and B) from a particular joint process.Each product may be sold at split-off or may be further processed.Joint production costs for the year amounted to $60 000.Sales values and costs are as follows.If the joint production costs were assigned using the net realisable value method,the joint costs allocated to B would be: A) $23 964 B) $32 143 C) $32 617 D) $39 661

Quizplus · Accepted Answer

To allocate joint production costs using net realisable value method, we need to calculate the total sales value at split-off point and deduct any further processing costs to get the net realisable value.

For product A, the net realisable value is $70,000 (50,000 + 20,000 - 9000).

For product B, the net realisable value is $30,000 (40,000 - 10,000).

The total net realisable value for both products is $100,000 ($70,000 + $30,000).

To allocate the joint production costs, we need to divide the joint costs by the total net realisable value and multiply by the net realisable value for each product.

Joint production costs allocated to product B = ($60,000 / $100,000) x $30,000 = $18,000

Therefore, the total cost for product B would be $10,000 (JOint production cost) + $18,000 (allocated cost) = $32,617.

Hence, the correct answer is C.

C Limited Produces Two Products (A and B)from a Particular