question archive Corey Corporation manufactures joint products W and X
Corey Corporation manufactures joint products W and X
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Corey Corporation manufactures joint products W and X. During a recent period, joint costs amounted to $300,000 in the production of 20,000 gallons of W and 60,000 gallons of X. Both products will be processed beyond the split-off point, giving rise to the following data:
| W | X | |||||
| Separable processing costs | $ | 40,000 | $ | 160,000 | ||
| Sales price (per gallon) if processed beyond split-off | $ | 14 | $ | 12 | ||
The joint cost allocated to X under the net-realizable-value method would be:
Multiple Choice
A. $210,000.
B. $180,000.
C. $184,000.
D. $190,000.
E. None of the answers is correct.
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Answer
|
W |
X |
|
|
Selling price per gallon |
14 |
12 |
|
Gallons |
20,000 |
60,000 |
|
Sales |
280,000 |
720,000 |
|
Separable processing costs |
40,000 |
160,000 |
|
Profit |
240,000 |
560,000 |
Total Profit = 800,000 (240,000 + 560,000)
X’s Share = (X’s profit / Total Profit) * 100
= (560,000 / 800,000) * 100
X’s Share = 70%
X’s Share in Joint Cost = X’s share * Joint Cost
= 70% * 300,000
X’s Share in Joint Cost = $210,000
Answer = $210,000
