Rocky Mountain Company Produces Two Products (X and Y) from a Joint

Multiple Choice

Rocky Mountain Company produces two products (X and Y) from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Joint manufacturing costs for the year were $60,000. Sales values and costs were as follows: $\begin{array}{c}\begin{array}{c}\\\\\underline{\text { Product} } \\\mathrm{X} \\\mathrm{Y} \end{array}\begin{array}{c}\\\text {Units}\\\underline{\text {Made}}\\9,000\\6,000\end{array}\begin{array}{c}\\\text {Sales Value}\\\underline{\text { at Split-off }}\\\$ 40,000 \\80,000\end{array}\begin{array}{cc}\quad\text { If Processed Further } \\\text { Sales } & \text { Separable } \\\underline{\text { Value }} &\underline{ \text { Costs} } \\\$ 78,000 & \$ 10,500 \\90,000 & 7,500\end{array}\end{array}$

If the joint production costs are allocated based on the net-realizable-value method, the amount of joint cost assigned to product Y would be:

A) $20,000.
B) $27,000.
C) $33,000.
D) $40,000.
E) None of the other answers are correct.