Carving Creations jointly produces wood chips and sawdust used in agriculture. The wood chips and sawdust are actually by-products of the company’s core operations, but Carving Creations accounts for them just like normally produced goods because of their large volumes. One jointly produced batch yields 3,000 cubic yards of wood chips and 10,000 cubic yards of sawdust, and the estimated cost per batch is $21,400. However, the joint production of each good is not equally weighted. Management at Carving Creations estimates that for the time it takes to produce 10 cubic yards of wood chips in the joint production process, only 2 cubic yards of sawdust are produced. Given this information, allocate the joint costs of production to each product using the weighted average method.
Carving Creations jointly produces wood chips and sawdust used in agriculture. The wood chips
and sawdust are actually by-products of the company’s core operations, but Carving Creations
accounts for them just like normally produced goods because of their large volumes. One jointly
produced batch yields 3,000 cubic yards of wood chips and 10,000 cubic yards of sawdust, and
the estimated cost per batch is $21,400. However, the joint production of each good is not equally
weighted. Management at Carving Creations estimates that for the time it takes to produce 10 cubic
yards of wood chips in the joint production process, only 2 cubic yards of sawdust are produced.
Given this information, allocate the joint costs of production to each product using the weighted
average method.
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