Custom Carvings Company 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 Custom Carvings accounts for them just like normally produced goods because of their large volumes. One jointly produced batch yields 2,000 cubic yards of wood chips and 6,000 cubic yards of sawdust, and the estimated cost per batch is $27,300. However, the joint production of each good is not equally weighted. Given management estimates for how long it takes to make sawdust vs. wood chips, a weight factor of 14 is used for wood chips in the joint production process, and a weight factor of 2 is used for sawdust. Given this information, allocate the joint costs of production to each product using the weighted average method. Joint Product Allocation Sawdust Wood chips Totals
Joint Cost Allocation—Weighted Average Method
Custom Carvings Company 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 Custom Carvings accounts for them just like normally produced goods because of their large volumes. One jointly produced batch yields 2,000 cubic yards of wood chips and 6,000 cubic yards of sawdust, and the estimated cost per batch is $27,300. However, the joint production of each good is not equally weighted. Given management estimates for how long it takes to make sawdust vs. wood chips, a weight factor of 14 is used for wood chips in the joint production process, and a weight factor of 2 is used for sawdust.
Given this information, allocate the joint costs of production to each product using the weighted average method.
| Joint Product | Allocation |
|---|---|
| Sawdust | |
| Wood chips | |
| Totals |
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