Bunny Company manufactures three products from a joint process.Joint costs for the year amounted to $250,000.The following data was available: Assume the relative-sales-value method of allocating joint costs is used.What amount of joint costs is allocated to Product Z?
A)$50,000
B)$100,000
C)$125,000
D)$250,000

Question

Bunny Company manufactures three products from a joint process.Joint costs for the year amounted to $250,000.The following data was available:  Assume the relative-sales-value method of allocating joint costs is used.What amount of joint costs is allocated to Product Z?
A)$50,000 
B)$100,000 
C)$125,000 
D)$250,000

Quizplus · Accepted Answer

Using the relative-sales-value method, we need to calculate the sales value for each product as a percentage of the total sales value for all three products:

Product X: $100,000 ÷ $500,000 = 20%
Product Y: $200,000 ÷ $500,000 = 40%
Product Z: $200,000 ÷ $500,000 = 40%

We then allocate the joint costs based on these percentages:

Product X: 20% x $250,000 = $50,000
Product Y: 40% x $250,000 = $100,000
Product Z: 40% x $250,000 = $100,000

Therefore, the amount of joint costs allocated to Product Z is $100,000.

Bunny Company Manufactures Three Products from a Joint Process