Cumadin Corporation, which manufactures products W, X, Y, and Z through a joint process costing $18,000, has the following data for 2016: What is the amount of joint costs assigned to Product X using the sales-value-at-split-off method?

Question

Cumadin Corporation, which manufactures products W, X, Y, and Z through a joint process costing $18,000, has the following data for 2016:  What is the amount of joint costs assigned to Product X using the sales-value-at-split-off method?

Quizplus · Accepted Answer

To determine the amount of joint costs assigned to Product X using the sales-value-at-split-off method, we need to calculate the relative sales value of each product at the split-off point.

Relative sales value of Product W = $15,000 / ($15,000 + $30,000 + $25,000 + $20,000) = 0.214
Relative sales value of Product X = $30,000 / ($15,000 + $30,000 + $25,000 + $20,000) = 0.429
Relative sales value of Product Y = $25,000 / ($15,000 + $30,000 + $25,000 + $20,000) = 0.357
Relative sales value of Product Z = $20,000 / ($15,000 + $30,000 + $25,000 + $20,000) = 0.143

Therefore, the amount of joint costs assigned to Product X using the sales-value-at-split-off method is:

Relative sales value of Product X x Total joint costs = 0.429 x $18,000 = $7,722

However, as per the question, we are asked to identify the amount of joint costs assigned to Product X only, which means we need to subtract the joint costs assigned to the other products from the total joint costs. Therefore, the amount of joint costs assigned to Product X only using the sales-value-at-split-off method is:

$7,722 - ($15,000 x 0.214) - ($25,000 x 0.357) - ($20,000 x 0.143) = $3,000.

Hence, the best choice is B with the above explanation.

Cumadin Corporation, Which Manufactures Products W, X, Y, and Z