Chapter 16, Problem 16.28P

1.

a.

To determine

To compute: Joint cost allocation as per sales value at split off method.

Given information:

Joint cost is $105,000.

Sales value of C in December is 45,000.

Sales value at split-off of A, B and D in December is $75,000, $62,500 and $67,500.

Separable cost of A, B and D is $240,000, $60,000 and $45,000

Revenue from A, B and D is $375,000, $150,000 and $75,000.

b.

To determine

To compute: Joint cost allocation as per physical measure method.

c.

To determine

To compute: Joint cost allocation as per NRV method.

2.

To determine

To compute: Effect on operating income due to different decisions about the further processing of products A, B or D.

Given information:

For A

Sales value of after process is computed to be $375,000.

Sales value of at split-off is computed as $75,000.

Separable cost is $240,000.

For B

Sales value of after process is computed to be $150,000

Sales value of at split-off is computed as $62,500.

Separable cost is $60,000.

For D

Sales value of after process is computed to be $75,000

Sales value of at split-off is computed as $67,500

Separable cost is $45,000.