Joint products A and B emerge from common processing that costs $200,000 and yields 2,000 units of Product A and 1,000 units of Product B.Product A can be sold for $100 per unit.Product B can be sold for $120 per unit.How much of the joint cost will be assigned to Product A if joint costs are allocated on the basis of relative sales values? (Do not round your intermediate calculations. )
A) $75,000
B) $125,000
C) $100,000
D) $133,333

Question

Quizplus · Accepted Answer

Allocation rate = Total cost to be allocated ÷ Cost driver (allocation base)
Allocation rate = $200,000 in joint costs ÷ [(2,000 units x $100 per unit)+ (1,000 units x $120 per unit)] = 62.5%
Allocation per cost object = Allocation rate x Weight of the cost driver for that cost object
Allocation of joint costs to Product A = 62.5% x (2,000 units x $100 per unit)= $125,000

Joint Products a and B Emerge from Common Processing That