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In a joint process, Wear Art produces precut fabrics for three products: dresses, jackets, and blouses. Joint cost is allocated on the basis of relative sales value at split-off. The company can choose to process each of the products further rather than sell the fabric at split-off. Information related to these products follows. Dresses Jackets Blouses Total Number of units produced 10,000 16,000 6,000 32,000 Joint cost allocated ? $138,000 ? $360,000 Sales values at split-off point ? $230,000 $ 80,000 $600,000 Additional costs of processing further $ 26,000 $ 20,000 $ 78,000 $124,000 Sales values after all processing $300,000 $268,000 $210,000 $778,000

a. What amount of joint cost should be allocated to dresses and blouses?

b. What is the sales values at the split-off point for dresses?

c. Should any of the products be processed beyond the split-off point? Show computations.

d. If 12,000 jackets are processed further and sold at the regular selling price, what is the gross profit on the sale.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9965385

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