Exercise 7.26 (Algorithmic)
Alomar Company manufactures four products from a joint production process: barlon, selene, plicene, and corsol. The joint costs for one batch are as follows:
At the split-off point, a batch yields 1,800 barlon, 2,300 selene, 2,200 plicene, and 3,900 corsol. All products are sold at the split-off point: barlon sells for $15 per unit, selene sells for $24 per unit, plicene sells for $26 per unit, and corsol sells for $36 per unit.
Allocate the joint costs using the sales-value-at-split-off method. If required, round allocation rates to four decimal places and round the final allocations to the nearest dollar.
|Allocated Joint Cost|
(Note: The total of the allocated cost may not equal actual total costs to due to rounding.)
|Calculation of sale value at split off point|
|Products||Yield at split off point (in units)||Sale rate per unit at split off point||Sale Value|
|Allocation of joint costs using the sales-value-at-split-off method|
|Products||Cost formula||Allocated costs|
|Total Joint costs = $60000+$34000+$26000 = $120000|
|Sale value at spli off ratio for 4 products is|
|Cost allocation formula = Total Joint cost * Sale value of product / Total sale value of all products|