Double Company produces three products — DBB-1, DBB-2, and DBB-3 from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Key information about Double's production, sales, and costs follows. DBB-1 DBB-2 DBB-3 Total Units Sold 18,800 28,200 40,200 87,200 Price (after additional processing) $ 65 $ 50 $ 75 Separable Processing cost $ 129,250 $ 51,700 $ 73,700 $ 254,650 Units Produced 18,800 28,200 40,200 87,200 Total Joint Cost $ 4,160,000 Sales Price at Split-off $ 25 $ 35 $ 55 The amount of joint costs allocated to product DBB-3 using the net realizable value method is:
Double Company produces three products — DBB-1, DBB-2, and DBB-3 from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Key information about Double's production, sales, and costs follows. DBB-1 DBB-2 DBB-3 Total Units Sold 18,800 28,200 40,200 87,200 Price (after additional processing) $ 65 $ 50 $ 75 Separable Processing cost $ 129,250 $ 51,700 $ 73,700 $ 254,650 Units Produced 18,800 28,200 40,200 87,200 Total Joint Cost $ 4,160,000 Sales Price at Split-off $ 25 $ 35 $ 55 The amount of joint costs allocated to product DBB-3 using the net realizable value method is:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Double Company produces three products — DBB-1, DBB-2, and DBB-3 from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Key information about Double's production, sales, and costs follows.
| DBB-1 | DBB-2 | DBB-3 | Total | |
|---|---|---|---|---|
| Units Sold | 18,800 | 28,200 | 40,200 | 87,200 |
| Price (after additional processing) | $ 65 | $ 50 | $ 75 | |
| Separable |
$ 129,250 | $ 51,700 | $ 73,700 | $ 254,650 |
| Units Produced | 18,800 | 28,200 | 40,200 | 87,200 |
| Total Joint Cost | $ 4,160,000 | |||
| Sales Price at Split-off | $ 25 | $ 35 | $ 55 |
The amount of joint costs allocated to product DBB-3 using the net realizable value method is:
Expert Solution
Step 1
In the net realizable value of allocating joint cost, we first compute the final selling price. Then we deduct the separable cost and compute the net realizable value at split-off point.
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