Collie Company manufactures three products from a joint process. Joint costs for the year amounted to $250,000. The following data are also available: $\begin{array}{lll}&&\text { Sales } V \text { alue at }\
\text { Product } & \text { Units Produced } & \text { Split- off } \
X & 5,000 & \$ 70,000 \
Y & 3,000 & \$ 30,000 \
Z & 2,000 & \$ 100,000
\end{array}$ Assuming the relative- sales- value method of allocating joint costs, the amount of joint costs allocated to product Z would be:
A) $50,000
B) $100,000
C) $250,000
D) $125,000

Question

Quizplus · Accepted Answer

The relative-sales-value method allocates joint costs based on the relative sales value of each product. The total sales value of all three products is $200,000 ($70,000 + $30,000 + $100,000). Product Z has a sales value of $100,000, which represents 50% of the total sales value. Therefore, 50% of the joint costs, or $125,000, would be allocated to product Z.

Collie Company Manufactures Three Products from a Joint Process Assuming the Relative- Sales- Value Method of Allocating Joint Costs