Deli Products produces two products, X and Y, in a single process. In 2011, the joint costs of this process were $25,000. In addition, 4,000 units of X and 6,000 units of Y were produced and sold. Separable processing costs beyond the split-off point were: X - $10,000; Y - $20,000. X sells for $10.00 per unit; Y sells for $7.50 per unit.
What is the gross profit of product Y assuming the physical units method is used?
SUPPORTING CALCULATIONS: Joint cost allocation (6,000/10,000 × $25,000) = $15,000 Gross profit [(6,000 × $7.50) - $20,000 - $15,000] = $10,000

Question

Quizplus · Accepted Answer

Using the physical units method, the gross profit of product Y is calculated by subtracting the separable processing costs ($20,000) and the allocated joint costs ($15,000) from the sales revenue generated by product Y (6,000 units x $7.50 per unit = $45,000). Therefore, the gross profit for product Y is $45,000 - $20,000 - $15,000 = $10,000. Choice C is the correct answer.

Deli Products Produces Two Products, X and Y, in a Single