Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 18

Require the following information about a joint production process for three products, with a total joint production cost of $100,000. There are no separable processing costs for any of the three products.

Product	Sales Value at Split-Off	Units at Split-Off
1	$130,000	240
2	50,000	960
3	20,000	1,200
	$200,000	2,400

Assume that the total sales value at the split-off point for product 1 is $50,000 instead of $130,000 and the sales value of product 3 is $2,000 instead of $20,000. Assume also that, because of its rela­tively low sales value, the firm treats product 3 as a by-product and uses the net realizable value method for accounting for joint costs. There are no separable processing costs for product 3. What amount of joint cost would be allocated to the three products?