Data pertaining to a company's joint production for the current period follows: $\begin{array}{llr}
& \text { L } & \text { M }\
\text { Quantities produced } &200 Ibs&150Ibs\
\text { Market value at split-off point } &\$8/Ib&\$16/Ib
\end{array}$
Compute the cost to be allocated to Product L for this period's $660 of joint costs if the value basis is used. (Do not round your intermediate calculations.)
A) $796.
B) $1,364.
C) $264.
D) $396.
E) $330.

Question

Data pertaining to a company's joint production for the current period follows: $\begin{array}{llr}
&  \text { L } & \text { M }\
 \text { Quantities produced } &200 Ibs&150Ibs\
 \text {  Market value at split-off point } &\$8/Ib&\$16/Ib
\end{array}$
 Compute the cost to be allocated to Product L for this period's $660 of joint costs if the value basis is used. (Do not round your intermediate calculations.)
A) $796.
B) $1,364.
C) $264.
D) $396.
E) $330.

Quizplus · Accepted Answer

To compute the cost to be allocated to Product L using the value basis, we need to determine the relative sales value of each product at the split-off point. 
Total sales value = Sales value of Product J + Sales value of Product L = $6,000 + $4,000 = $10,000 
Relative sales value of Product L = Sales value of Product L/Total sales value = $4,000/$10,000 = 0.4 
Cost allocated to Product L = $660 x 0.4 = $264

Data Pertaining to a Company's Joint Production for the Current