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A company makes 2 different types of product, A and B, from a joint process. A production run costs $20,000 and results in 500 units of A and 2,000 of B. Both products must be processed past the split-off point, incurring separable cost for A of $5 per unit and for B of $10 per unit. The market price for A is $25 and for B is $20.

Questions:

1. What is the total cost per unit for A and B, assuming that joint costs are allocated using the NET REALIZABLE VALUE method?

2. What is the total cost per unit for A and B, assuming that joint costs are allocated using the PHYSICAL UNITS method?

3. What is the total cost per unit for A and B, assuming that joint costs are allocated using the FINAL SALES VALUE method?

4. If A can be sold for $15 at split-off, should it be then or processed further? Justify your answer with number.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9961646

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