Impacto Corporation produces four products in a joint process for $650,000. The following information is available on total sales and production in units: What amount of joint costs will be allocated to I based on the physical units method?

Question

Impacto Corporation produces four products in a joint process for $650,000. The following information is available on total sales and production in units:  What amount of joint costs will be allocated to I based on the physical units method?

Quizplus · Accepted Answer

The physical units method allocates joint costs based on the number of physical units produced. To allocate the joint costs to each product, we need to find the total number of physical units produced by all four products.

Total units = 5,000 (A) + 3,000 (B) + 2,000 (C) + 4,000 (D) = 14,000 units

Now, we can calculate the joint cost per unit:

Joint cost per unit = Total joint costs / Total units produced
Joint cost per unit = $650,000 / 14,000 units = $46.43 per unit

To allocate joint costs to product I, we need to multiply the joint cost per unit by the number of units produced for product I:

Joint costs allocated to I = Joint cost per unit x Units produced for I
Joint costs allocated to I = $46.43 x 4,000 units = $185,720

Therefore, the amount of joint costs allocated to product I based on the physical units method is $185,720, which is option C.

Impacto Corporation Produces Four Products in a Joint Process for $650,000