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Cahill Lumber manufactures mulch and wood bark from a joint processing operation using wood as the raw material. For a recent month, 8,000 pounds of mulch were produced having a sales value after split-off point of $21,000. 4,000 pounds of wood bark were produced having a sales value after split-off of $14,000. Using the net- realizable-value method, the portion of the total joint product costs allocated to mulch was $12,000. (CPA adapteD
-The amount of joint costs allocated to wood bark using the net-realizable-value method would be:
A) $18,000
B) $13,000
C) $8,000
D) $3,000

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The net-realizable-value method allocates joint costs based on the proportion of the sales value of each product. The total sales value is $21,000 (mulch) + $14,000 (wood bark) = $35,000. The proportion for wood bark is $14,000 / $35,000. The total joint costs are $12,000 (allocated to mulch) + X (allocated to wood bark). Solving for X gives $8,000.

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