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General Chemical Company (GCC)manufactures two products as part of a joint process: A1 and B1.Joint costs up to the split-off point total $22,000.The joint costs are allocated to A1 and B1 in proportion to their relative sales values.At the split-off point,product A1 can be sold for $42,000,whereas product B1 can be sold for $63,000.Product A1 can be processed further to make product A2,at an incremental cost of $38,000.A2 can be sold for $85,000.Product B1 can be processed further to make product B2,at an incremental cost of $48,000.B2 can be sold for $95,000.
-Joint costs allocated to product A1 total:
A)$8,800.
B)$13,500.
C)$13,200.
D)$22,000.

Question

Quizplus · Accepted Answer

Joint costs are allocated to A1 and B1 in proportion to their relative sales values. At the split-off point, product A1 can be sold for $42,000, whereas product B1 can be sold for $63,000. Therefore, the joint costs allocated to product A1 are $22,000 * (42,000 / (42,000 + 63,000)) = $8,800.

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