Question 1
An example of allocating joint costs using physical measures is allocating joint costs based on the ________.
◦ sales value at split-off point
◦ volume of the products produced
◦ constant gross-margin percentage
◦ net realizable value
Question 2
Beverage Drink Company processes direct materials up to the split-off point where two products, A and B, are obtained. The following information was collected for the month of July:
| Direct materials processed: | 3000 liters (with 15% shrinkage) |
The cost of purchasing 3000 liters of direct materials and processing it up to the split-off point to yield a total of 2550 liters of good products was $7500. There were no inventory balances of A and B.
Product A may be processed further to yield 500 liters of Product Z5 for an additional processing cost of $170. Product Z5 is sold for $25 per liter. There was no beginning inventory and ending inventory was 125 liters.
Product B may be processed further to yield 1875 liters of Product W3 for an additional processing cost of $325. Product W3 is sold for $35 per liter. There was no beginning inventory and ending inventory was 25 liters.
If Product Z5 and Product W3 are produced, what are the expected sales values of production, respectively?
◦ $65,625 and $12,500
◦ $21,000 and $58,500
◦ $17,500 and $46,875
◦ $12,500 and $65,625
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