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

Exercise 19

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 the same as in 7-19 above except that product 3 is treated as a joint product. What amount of joint costs would be allocated to the three products using the relative sales value method?

Step 1 of 4

Relative Sales Value Method:

Relative sales value method is one of the methods of allocating joint cost to the products. It is also known as the Sales value at split off method. In relative sales value method joint cost is allocated to the joint products based on their relative sales value at the split off point.

This method is most widely used in allocating joint cost.