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 20,000 30,000 42,000 92,000 Price (after additional processing) $ 65 $ 50 $ 75 Separable Processing cost $ 150,000 $ 84,000 $ 106,000 $ 340,000 Units Produced 20,000 30,000 42,000 92,000 Total Joint Cost $ 3,800,000 Sales Price at Split-off $ 25 $ 35 $ 55 The amount of joint costs allocated to product DBB-1 using the physical measure 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 20,000 30,000 42,000 92,000 Price (after additional processing) $ 65 $ 50 $ 75 Separable Processing cost $ 150,000 $ 84,000 $ 106,000 $ 340,000 Units Produced 20,000 30,000 42,000 92,000 Total Joint Cost $ 3,800,000 Sales Price at Split-off $ 25 $ 35 $ 55 The amount of joint costs allocated to product DBB-1 using the physical measure 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 | 20,000 | 30,000 | 42,000 | 92,000 |
| Price (after additional processing) | $ 65 | $ 50 | $ 75 | |
| Separable |
$ 150,000 | $ 84,000 | $ 106,000 | $ 340,000 |
| Units Produced | 20,000 | 30,000 | 42,000 | 92,000 |
| Total Joint Cost | $ 3,800,000 | |||
| Sales Price at Split-off | $ 25 | $ 35 | $ 55 |
The amount of joint costs allocated to product DBB-1 using the physical measure method is:
Expert Solution
Step 1 Introduction
Using physical method pf joint cost allocation, the joint cost is allocated to the products on the basis of number of units.
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