Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 16

Brief Exercise 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.

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