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 10000 16000 6000 32000
Joint cost allocated ? $138000 ? $360000
Sales values at split-off point ? $230000 $ 80000 $600000
Additional costs of processing further $ 26000 $ 20000 $ 78000 $124000
Sales values after all processing $300000 $268000 $210000 $778000
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
d. If 12000 jackets are processed further and sold at the regular selling price what is
the gross profit on the sale
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