The following information relates to a joint production process for three products, with a total joint production cost of $175,000. There are no separable processing costs for any of the three products. Product Sales Value at Split-Off Units at Split-Off 1 $ 227,500 680 2 87,500 1,020 3 35,000 1,700 $ 350,000 3,400 Assume that the total sales value at the split-off point for product 1 is $87,500 instead of $227,500 and the sales value of product 3 is $3,500 instead of $35,000. Assume also that, because of its relatively low sales value, the firm treats product 3 as a by-product and uses the asset recognition method for accounting for by-products. What amount of joint cost would be allocated to the products using the sales value at split-off method?
The following information relates to a joint production process for three products, with a total joint production cost of $175,000. There are no separable processing costs for any of the three products. Product Sales Value at Split-Off Units at Split-Off 1 $ 227,500 680 2 87,500 1,020 3 35,000 1,700 $ 350,000 3,400 Assume that the total sales value at the split-off point for product 1 is $87,500 instead of $227,500 and the sales value of product 3 is $3,500 instead of $35,000. Assume also that, because of its relatively low sales value, the firm treats product 3 as a by-product and uses the asset recognition method for accounting for by-products. What amount of joint cost would be allocated to the products using the sales value at split-off method?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following information relates to a joint production process for three products, with a total joint production cost of $175,000. There are no separable
| Product | Sales Value at Split-Off | Units at Split-Off |
|---|---|---|
| 1 | $ 227,500 | 680 |
| 2 | 87,500 | 1,020 |
| 3 | 35,000 | 1,700 |
| $ 350,000 | 3,400 |
Assume that the total sales value at the split-off point for product 1 is $87,500 instead of $227,500 and the sales value of product 3 is $3,500 instead of $35,000. Assume also that, because of its relatively low sales value, the firm treats product 3 as a by-product and uses the asset recognition method for accounting for by-products. What amount of joint cost would be allocated to the products using the sales value at split-off method?
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