Kemp Company manufactures three products from a joint process.Joint costs for the year amounted to $250,000.The following data was available:
$$\begin{array} { l l l }
\text { Product } & \text { Units Produced } & \text { sales Value at Split-off } \
\hline X& 5,000 & \$ 70,000 \
Y & 3,000 & \$ 30,000 \
Z & 2,000 & \$ 100,000
\end{array}$$
Assume the relative-sales-value method of allocating joint costs is used.What amount of joint costs is allocated to Product Y?
A) $30,000
B) $37,500
C) $75,000
D) $250,000

Question

Kemp Company manufactures three products from a joint process.Joint costs for the year amounted to $250,000.The following data was available:
$$\begin{array} { l l l } 
\text { Product } & \text { Units Produced } & \text { sales Value at Split-off } \
\hline X& 5,000 & \$ 70,000 \
Y & 3,000 & \$ 30,000 \
Z & 2,000 & \$ 100,000
\end{array}$$
Assume the relative-sales-value method of allocating joint costs is used.What amount of joint costs is allocated to Product Y?
A) $30,000
B) $37,500
C) $75,000
D) $250,000

Quizplus · Accepted Answer

The relative-sales-value method allocates joint costs based on the proportion of each product's sales value at the split-off point to the total sales value at the split-off point. The total sales value at split-off is $70,000 (X) + $30,000 (Y) + $100,000 (Z) = $200,000. Product Y's share of the total sales value is $30,000 / $200,000 = 15%. Therefore, Product Y's allocated joint costs are 15% of $250,000 = $37,500.

Kemp Company Manufactures Three Products from a Joint Process Assume the Relative-Sales-Value Method of Allocating Joint Costs Is Used