Question

The Berkel Corporation manufactures​ Widgets, Gizmos, and Turnbols from a joint process. June production is 5 comma 000 ​widgets; 8 comma 750 ​gizmos; and 10 comma 250 turnbols. Respective per unit selling prices at splitminusoff are $ 85​, $ 55​, and $ 20. Joint costs up to the splitminusoff point are $ 188 comma 500. What amount of joint costs will be allocated to the​ Gizmos? (Do not round any intermediary​ calculations.)

Answer 1

Answer:

Cost allocated to Gizmos

Using Physical Measurement Method is $68,724

Using Relative Sales Value Method is $81,634

Explanation:

                             Widgets          Gizmos        Turnbols     Total

June production     5,000            8,750           10,250       24,000

Selling Price             $85​               $55               $20           $160

Sales Value         425,000          481,250       205,000     1,111,250

Joint costs = $188,500

Physical Measurement Method

Cost allocated to Gizmos =( Quantity of the Product  / Quantity of Total Production  ) x Total Joint Costs

Cost allocated to Gizmos = ( 8,750 / 24,000 ) x $188,500

Cost allocated to Gizmos = $68,724

Relative Sales Value Method

Cost allocated to Gizmos = ( Sale Value of the Product  / Sales Value of Total Production  ) x Total Joint Costs

Cost allocated to Gizmos = ( 481,250 / 1,111,250 ) x 188,500 = $81,634